Borrowing for the bill, from lenders that are not banks

The loan for the electricity bill

Buy now, pay later began as a way to split a pair of trainers into four payments. It is now being sold for the power bill.

The lending apps Flex and Zip let customers borrow to pay broadband, electricity, health insurance, mobile phone, mortgage and water bills [1]. Affirm, one of the biggest pay-later apps, has started lending some tenants money to stretch a monthly rent payment by a few weeks [1]. Dentists, vets and medical clinics now often offer instant pay-later financing at the counter. Intuit this year began pitching “File Now, Pay Later” loans to TurboTax users who owe money on their return [1].

Americans spent $160 billion through pay-later loans last year, according to research by Federal Reserve economists [1]. That is nearly twice what they spent in 2023 [1]. Karen Webster, chief executive of the payments research firm Pymnts, described the loans as “working capital for the modern middle class” [1].

The ordinary kind of borrowing is climbing too. A Federal Reserve report in May found US household credit-card debt hit an all-time high in 2025 [2]. Card balances in the first three months of 2026 were 5.9% higher than a year earlier, alongside bigger mortgage, car-loan and home-equity balances [2].

None of that proves distress on its own. But it lands the same week that US retail sales fell for the first time in nine months, and consumer confidence slipped in the University of Michigan survey [3]. Results from Home Depot, Target and Walmart later this week are the next read on whether shoppers are pausing or genuinely squeezed [3]. For anyone using these loans, the arithmetic is plain: interest paid to cover a bill is added to the cost of living, not taken off it.

Where the lender gets the money

The other half of the credit story is quieter, and it ran through three continents on Monday.

In India, banks are racing to borrow dollars before a door shuts. The Reserve Bank of India brought forward to 31 August the closing date of a currency swap window [4]. Banks had been using that window to cover their exposure to deposits raised from Indians living abroad [4]. Private and state lenders are now on track to raise at least $5 billion of dollar bonds and loans in a fortnight [4]. ICICI Bank and HDFC Bank are each in talks for around $1.5 billion, with Axis, YES, RBL and Kotak Mahindra each planning at least $500 million [4].

The window is closing because it worked. Banks pulled in $50 billion of deposits from non-resident Indians in about two months, more than expected [5]. That was part of a policy push that has brought in close to $57 billion and lifted India’s foreign currency reserves above $700 billion [5]. Citi now estimates India will run a balance of payments surplus of $53 billion in the 2027 financial year [5].

In Jakarta, Bank Indonesia extended a home-grown credit card system to individuals on Monday, working with major local lenders to support consumer loans [6]. The aim is to route more card payments through domestic systems rather than Visa and Mastercard [6].

And in the corporate world, the biggest companies are borrowing rather than paying from the till. Alphabet hired banks for its first Australian dollar bond, considering three, five, ten and twenty-year maturities [7]. It raised $25 billion of dollar bonds earlier this month, after selling almost $85 billion of new shares in June [7]. In late July it posted its first ever negative free cash flow [7]. Global technology firms are expected to spend more than $730 billion this year, mostly on artificial intelligence, and that outlay is squeezing their cash [7]. Bond sales in Australian dollars by foreign issuers are at a record of about A$60 billion this year, roughly 40% above 2025 [7].

The price of borrowing at the top

While households borrow at the checkout, governments are paying the most to borrow in nearly two decades.

Government borrowing costs across the rich world hit their highest level since the 2008 crisis on Monday, as investors bet the Iran war will keep prices rising [8]. The yield on 30-year French bonds reached 4.8558%, the highest since September 2008 [8]. France’s 10-year hit 4.0516%, a level last seen in June 2009, and Germany’s 10-year touched 3.2138%, the highest since 2011 [8]. The US 30-year yield rose to 5.29%, its highest since 2007 [8]. Money markets now put the chance of a European Central Bank rate rise in September at almost 85% [8]. A yield is simply the interest rate a government pays to borrow, and it rises when investors demand more to hold the debt.

It got dearer again overnight. The 60-day US-Iran truce expired without a deal, and Tehran said it would move to a “fully offensive” posture [9]. The US 30-year yield climbed to 5.3146%, its highest in more than two decades [9]. Japan’s 10-year yield reached 2.945%, a three-decade high [9]. On Wall Street the S&P 500 slipped 0.5% and the Nasdaq 0.3% [9]. Asian shares held up, with South Korea’s KOSPI up more than 3% as Seoul returned from a holiday [9].

The oddity is that expectations for the US central bank went the other way. Ninety-four of 104 economists in a Reuters poll expect the Federal Reserve to leave its key rate at 3.50%-3.75% in September [10]. Markets moved to price a near-70% chance of no change after July’s unexpected job losses [10]. Three policymakers dissented in favour of a rise last month, and markets still price one increase by the end of December, with oil about 25% above pre-war levels [10]. “The debate clearly is about the possibility of rate hikes,” said Ryan Wang, US economist at HSBC [10].

Money moved accordingly. The dollar fell to its weakest since early June, the euro touched a two-month high near $1.1614, and the yen firmed to about 159.15 [11]. Gold rose for a third session to $4,431.09 an ounce, with silver at $66.33 [12]. Minutes from the Fed’s last meeting are due Wednesday [12].

Underneath the calm sits the market’s fear gauge, the VIX, which measures how much swing investors expect over the coming month. It fell to its lowest level of 2026 [13]. Strategists read that as complacency, heading into the historically choppy stretch from mid-August to mid-October [13]. The S&P 500 has risen more than 6% in twelve trading days to a record [14]. CNBC’s Mike Santoli cautioned that the profit surge behind it may be a case of companies “over-earning” [14].

The wider economy

Canada’s annual inflation rate rose to 3% in July, slightly above the 2.9% economists expected, driven by petrol prices up 25.7% on the year [15]. That sits at the ceiling of the Bank of Canada’s 1% to 3% target range, though the underlying measures it watches most were 1.9% and 2.0% [15].

China lost momentum across the board. July retail sales grew just 0.6% from a year earlier against a forecast of 1.5% [16]. Investment in buildings and infrastructure fell 6.7%, factory output rose 4.5%, and urban unemployment ticked up to 5.2% [16]. The data was released at 3pm rather than the usual 10am [16].

Developing economies, by contrast, are pulling in money. Inflows into emerging market debt are at a more than two-decade high and governments there are issuing record amounts of bonds [17]. “Roughly from 2015 to 2025 was like the valley of tears for emerging markets,” said David Hauner, who heads emerging market fixed income strategy at Bank of America [17].

Deals, and one rule change worth noticing

Paramount Skydance asked a US judge to make the dozen states challenging its $110 billion purchase of Warner Bros Discovery post a $1.88 billion bond [18]. The company must pay Warner shareholders $7 million a day if the deal has not closed by 30 September [18]. It says it would hand over $1.3 billion in such fees before the trial concludes [18]. Elsewhere, Shein is targeting a valuation of about $25 billion in its Hong Kong listing, down from nearly $100 billion four years ago [19]. Madison Air Solutions agreed to buy the German fan and motor maker ebm-papst for $5.4 billion [20].

A smaller item with a sharp edge. Union Pacific collected $91.1 million more in fuel surcharges in the second quarter than it actually paid for fuel [21]. That added 14 cents a share to profit [21]. Surcharges are meant to pass on a rising oil price, not to earn on it, and rivals CSX and Norfolk Southern reported far smaller surpluses [21].

Finally, South Africa’s central bank confirmed it will finish new rules for the country’s over-the-counter derivatives market by 2028 [22]. Rand-linked contracts have a face value above $9.3 trillion, many times the country’s annual output [22]. The first products to face mandatory clearing through a central middleman would be rand interest-rate swaps [22]. A swap lets two parties trade a fixed interest payment for a floating one. Routing them through a central middleman means that if one side collapses, the other is not left holding the loss alone.