Dangerous indebtedness during shopping events such as Singles Day, Black Friday and Cyber ​​Monday: High interest rates from payment service providers and rising overdraft interest rates make buying on credit risky.

Dangerous indebtedness during shopping events such as Singles Day, Black Friday and Cyber ​​Monday: High interest rates from payment service providers and rising overdraft interest rates make buying on credit risky.

According to a report by www.tagesschau.de,

The upcoming shopping days such as “Singles Day”, “Black Friday” and “Cyber ​​Monday” can lead to dangerous levels of debt. Online payment service providers such as Klarna or PayPal in particular benefit from the “buy now, pay later” principle. Right now, around “Black Friday” and with Christmas in a few weeks, people are shopping heavily again, which is leading to increasing online debt. There is a questionable trend on the social media platform TikTok in which users brag about huge amounts of debt. In the worst case, these debts can lead to debt counseling. Overdraft interest rates at banks have also risen sharply, and the average is around twelve percent. This interest rate increase is already having a noticeable impact on many consumers. Nevertheless, living on credit is seen as a lucrative business model for many companies. Good news is that the EU has adopted a new consumer credit directive that makes it mandatory to check buyers' solvency for every purchase using deferred payment and installment credit.

The increasing online debt and the high overdraft interest rates at banks can lead to many consumers finding themselves in a difficult financial situation. However, the EU's Consumer Credit Directive could help ease the burden of uncontrolled debt. In the future, online payment service providers and credit card companies should implement stricter solvency checks to protect consumers from excessive debt. This could impact the market for payment service providers and financial companies, as stricter rules and regulations may be introduced to control and restrict lending. The rising interest rates could also lead to consumers increasingly looking for alternative financing methods, which could influence competition and product diversity in the financial industry.