The Late-Night Shopping Trap: Why Americans Make Risky Online Transactions After Midnight

Late Night Adventures and Financial Misadventures

Well well well it seems like Americans can't resist the allure of online shopping even when the clock strikes midnight. According to Affirm Chief Financial Officer Michael Linford those late night shopping sprees are riskier than you might think. It turns out that people don't always make the best decisions at two o'clock in the morning. Who would've thunk it?

The Key to Determining Creditworthiness: The Witching Hour

Affirm a fintech firm led by PayPal co founder Max Levchin has found a quirky data point to help determine whether to approve loans. They look at the hour when a consumer attempts a transaction. Apparently most times of day have the same credit risk but between midnight and 4 a.m. something strange happens. Cue the dramatic music because credit delinquencies spike right around 2 a.m. It's like the witching hour for financial decisions.

Late Night Shopping: Theories and Speculations

Why do people make riskier transactions at the dead of night? Well there are a few theories. Some might be under the influence of alcohol while others could be experiencing financial or emotional distress. It's like a perfect storm of bad decision making. But hey at least it gives us something to talk about right?

Real Time Approvals and the Buy Now Pay Later Trend

Fintech lenders like Affirm Klarna and Sezzle have found a way to embed their services in online checkout pages making it easy for customers to opt for buy now pay later options. These installment loans range from no interest short term transactions to higher rates for longer term credit. The key is the ability to approve or reject customers in real time using data to judge their creditworthiness. It's like having a financial genie granting (or denying) your wishes.

Affirm's Secret Sauce: Denying or Offering Smarter Loans

Affirm doesn't mess around when it comes to managing repayment risk. They either deny transactions altogether or offer shorter term loans with down payments. They're like the smart friend who tells you to think twice before making a questionable purchase. And hey it seems to be working. Despite a surge in purchase volumes their 30 day delinquencies only held steady at 2.4%. Take that credit cards!

Credit Card Delinquencies vs. Affirm's Approach

Speaking of credit cards they might want to take a page out of Affirm's book. While credit card delinquencies have been on the rise Affirm has managed to keep their repayment rates in check. Why? Well according to Linford credit card companies got a bit too aggressive and lost sight of proper underwriting. Meanwhile Affirm is playing it cool not charging late fees and refusing to revolve or compound. They're like the responsible adult in the room.