George Kamel - I Can't Believe This Company Just Admitted This...

Episode Date: August 6, 2025

💵 Start budgeting for free with EveryDollar.   One of the biggest players in the buy now, pay later space, has already lost over $100 million in revenue this year. Today, we’re diving into what’s really going on, and you’ll learn why the buy now, pay later model is way more dangerous than you think.   Next Steps: • 🎥 Watch my video The Horrible Mistake DoorDash Just Made (and Why It Matters). • 📈 Are you on track with the Baby Steps? Get a free personalized plan. • 📙 Order my book, Breaking Free From Broke, in hardcover.   Connect With Our Sponsors: • Get 20% off when you join DeleteMe. • Learn more about opening a high-yield savings account with Laurel Road. • Get up to 40% off Cozy Earth with code GEORGE. Explore More From Ramsey Network: 🎙️ The Ramsey Show 🍸 Smart Money Happy Hour 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 💡 The Rachel Cruze Show 🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

One of the biggest players in the Buy Now Pay Later space has a big problem. People ain't paying their debts. Get this, Klarna has lost over $100 million in revenue in the last year from people straight up not paying back their microloans. Color me shocked. You know, I've been saying for years that this whole thing is a ticking time bomb, and it might finally be exploited. So today, we're going to dive into what's really going on,

and you'll learn why the Buy Now Pay Later model is way more dangerous than you even think. Let's dive into this. During the first quarter of 2025, Klarna missed out on $136 million in revenue due to what they call consumer credit losses, aka customers not making their payments. And things got so bad that they apparently felt the need to do a press release for some good old-fashioned damage control. Let's look at the highlight, shall we? I am guessing I might be the only person who has ever looked at this Klarna press release. It's not a hot commodity in the online article world. Let's see here.

Clarna accelerates global momentum in Q1 of 2020. and unlocks large gains from AI innovation. Yada, yada, yada. The CEO said, the momentum is undeniable. And this is just Q1. Klarna has reached 100 million consumers and secured exclusive partnerships with major retailers. Okay, yada, yada, yada, this is interesting.

Reaping the benefits of spearheading AI. Let's see what that means. Since 2022, Klarna has streamlined its workforce by 40% while raising the share of tech employees. Okay, hold on. I'm getting vibes here, that they are saying they've streamlined their workforce by 40% thanks to AI is code for we fired a lot of people and replaced them with robots. So, sorry people who needed jobs, but the robots needed jobs more. It's so nice.

Streamlined its workforce. What a nice way to say you just laid off half your staff. All right. Well, you know what? Too many words. Didn't read. Let's watch this video. Let's see what this guy has to say.

Hello. Hey. Gooden talk. Ola. It's me, or rather, my AI avatar, here to share Klarna's Q1 2025 highlights. We're starting the year strong and three things really stand out. One, we've hit 100 million active consumers, the fastest growth we've seen in years. Two, Clana just delivered its fourth consecutive profitable quarter. And three, AI is now deeply embedded across our business, unlocking efficiency and record-setting growth.

So here's what I'm getting. The way to get to a million dollars of revenue per employee is to fire half your staff. Pretty smart move, my man. Increase that shareholder value. I've had enough of AI Sebastian. I've got to imagine, if AI Sebastian has this little charisma, how much charisma does real Sebastian have?

I hope more. You got to hope. Ola. And Guten Tag. Very impressive, though. This guy, this AI has been using Duo Leisure. Now, here's the craziest part of all. Despite losing over $100 million to people not paying, firing over 1,000 people, and apparently having an AI CEO, Clarnas still somehow made a profit last

quarter. And not only did they turn a profit, their revenue grew by 15% year over year. Which leads us to an important question. How is all of that possible? Well, it all comes down to the powerful business model these buy-now pay-later companies use, and it's elegantly designed to screw people in four easy steps. Step one, partner with merchants. Now, stop me if you've been here before, for. You're shopping online, about to buy a $15 t-shirt, you click checkout, and they pop the age-old question. Would you like to round up for the kids? And like a normal person, you click, no. Be more specific. Don't be weird and vague. Give kids money. What kids? What money? What are they using this money for? We don't know. Candy, candy! But then they pop another question. Would

you like to split this purchase into three easy payments of $5? That checkout option is the result of a partnership between the store you're shopping at and a buy-now pay-later company. And this is one of the first ways that companies like Klarna and Afterpay make money. These companies partner with big-name merchants like Walmart, Target, DoorDash, and Costco. And then they get a cut on all purchases made with their program, and it's great marketing for them, and it spawns brilliant journalism like this. The age-old question, can you finance a Costco hot dog? Step two, pray on broke people. Now, most of these companies have some kind of statement on their website about how they only make their installment loans to customers with the ability to repay. But let's be real, do we really think

that they're maintaining the highest standard for what qualifies someone for a purchase? Here's what I think. We're talking about companies that want people to think they're a helpful buddy that shows up when times are tough. And all of their brands lean on this hole, we're here to help five. But they're about as helpful as the creepy guy in a white van with candy and a puppy. And let's not forget some of their slogans. You've got afterpay.

Shop now. Pay better. Affirm. Pay at your own pace. And my least favorite, Clarna, get financial breathing room. Who do you think is enticed by the idea of getting breathing room for a $20 pair of jeans or a Chalupa Supreme, because it's certainly not people who are winning with money.

All this marketing is aimed at those who are truly struggling financially who see this as a genuine option to stay above water for at least one more day and keep up their lifestyle. It's like a life raft that quickly turns into an anchor. And that's only part of what makes these companies so slimy, because step three of their business model is to psychologically trick you into overspending. And I know this sounds like a world domination plot a la Sheldon J. Plankton, but it's unfortunately very real. It's diabolical.

You see, Buy Now Pay Later companies literally brag to retailers that customers will spend way more when they use these installment plans to pay for purchases. One study even showed that Klarna users increased their spending by 45% in some industries. So what's the connection between payment plans and spending more? Well, let's say you're contemplating a $100 purchase. And seeing that three-digit total may give you some pause, at least enough to spend a day deciding on it. But when you break that $100 into four easy payments of $25,

it doesn't seem like quite as big of a deal. And your brain starts to think, oh, well, I can totally swing that. In fact, I'm basically freeing up $75 in my budget. Well, that's an old retail trick called anchoring, and it hijacks your ability to think straight about the actual full price you're paying. You don't feel the sting of the purchase up front, so you can trick your brain to thinking you can afford it now. That's messed up.

Finally, step four, charge outrageous interest and fees. Just like credit cards, buy now, pay later companies love talking about how you won't owe them anything extra if you just make all of your payments on time. But get this, depending on the company, a miss payment on these installment plans can trigger late fees and or interest rates of up to 34%. For comparison, the average credit card interest rate is just over 21%. Now, 21% interest is awful in its own right. But somehow, it doesn't even seem that bad when pitted against what these buy and out pay later companies can charge you. And for all the people out there telling yourselves, you'll never miss a payment, I hear you. But the data says there's a 50-50 chance you're wrong.

because half of people who use a buy-now pay later plan wind up missing a payment. So at best, this business model is slimy, and at worst, it's straight up predatory. So how can you avoid falling into their trap, and what can we do about all this? Well, I have some ideas, and I'll share them in just a second. But first, let me give you an idea of where to stash your cash, whether you're saving up for a house, an emergency fund, or anything else. I recommend stashing your savings in a high-yield savings account with online bank Laurel Road, one of the sponsors of today's video.

Here's why. Laurel Road offers competitive top-tier APY that will let your money grow way faster than it would in a traditional savings account. Plus, there's no minimum balance required to open an account. Your deposits are FDIC insured, meaning they're safe and sound, and they never charge you any monthly maintenance fees,

which means all of your money stays your money. So get started today by going to laurelroad.com slash George or click the link in the description below. And before we get back to fighting the Buy Now Pay Later industry, let me tell you how you can fight fishing attacks and other types of online scams. And that's by using Delete Me, another sponsor of today's video.

Delete Me works overtime to clean up your digital footprint by scrubbing your personal info from hundreds of data broker sites. And this is a big deal, because when your info or your family's info is floating around unchecked on these sites, it makes you a much easier target for spam and scam on the internet. They'll even send you a report showing you what they've done and how much time they've saved you. And right now, you can get 20% off their annual plans

by going to join DeleteMe.com slash George or click the link in the description below. Okay, so what can we do about this buy-now, pay later disaster? Well, what if we just all agreed to avoid these terrible companies at all costs and not give them any more of our money? I know. I know. Call me crazy. But really, doing business with any of these companies afterpay, Klarna, a firm is a surefire way to wreck your financial world and perpetuate the problem. And like Pop Pop used to say, if you play with snakes long enough, eventually you'll get bit. He also said this one, if your soup tastes like secrets, stop asking questions.

I think he was starting to lose it there at the end. RIP, Pop Pop, Pop. So instead of relying on Buy Now, Now Pay Later, adopt these three cruise. crucial habits. First, use the 24-hour rule. Whenever you're contemplating a big purchase, take at least a full day to make sure it's really a good idea. Otherwise, abandoned cart. Sleep on it. Come back the next day. Odds are the item won't go anywhere. Unless you're bidding on a bag of air from the Erez tour, in which case, act fast. Nobody bought it. Zero bids. Would not recommend. Next up, budget for your purchases. Whether you're buying a car, a coffee

maker, or just a toothbrush, don't buy anything that you have not budgeted for. This is the easiest way to ensure you can actually afford everything you buy, and it keeps you from ever having to rely on these terrible installment plans. And if you want more on this, I will leave a link in the description to every dollar, which is the free budgeting app that I use every single month. And finally, just say no.

Buy Now Pay Later is not convenient. It's not a way to increase your buying power or afford things you wouldn't be able to otherwise. It's nothing more than a giant financial trap. So stay away and give it the old Dare treatment. No drugs, no violence, and no financing a Costco hot dog, even if you somehow find a way. And now I'm curious,

What boundaries do you set for your online spending? I would love to hear how you guys are staying disciplined, so leave a comment below letting me know your favorite strategies. Oh, and this is just scratching the surface of how stupid these companies are. I recently made this video breaking down Klarna's new partnership with DoorDash and how it's going to let people finance fast food. That's scary. So keep watching to check it out or click the link in the description below.

That's it for today. If you enjoyed this video, hit the like button, hit the subscribe button so you keep getting more of this content. Thank you guys for watching. We'll see you next time.