Lily awakens in Gerty's bed the following morning. When Gerty enters the bedroom, the closeness the two women shared the evening before is dispelled. Gerty has phoned Mrs. Peniston to inform her as to Lily's whereabouts.
Lily returns home to Mrs. Peniston. She determines that she will repay Trenor an amount that she estimates is nine thousand dollars. She requests a private conference with her aunt prior to Lily's appointment with Selden. Lily confesses to her aunt that she has financial worries as a result of clothing extravagances and gambling losses — while withholding from Mrs. Peniston the true extent of her debt — in the hopes that Mrs. Peniston will give her enough money to repay Trenor.
Mrs. Peniston expresses her intense displeasure at Lily's admission that she has been gambling — and that she has played cards on Sunday. On these grounds, she offers to give Lily only $1,000 to pay a dressmaker's bill.
Upset, Lily waits for Selden's arrival. She had initially hoped to find refuge in his company in the event Mrs. Peniston gave her the money to repay Trenor. Now, possessed with the knowledge that her aunt will not help her, she harbors hopes that Selden will marry her and enable her to put her troubles behind her.
Selden never arrives, however; instead, Rosedale pays Lily a visit. He boasts that he is now among the wealthiest men in New York, and that he intends to take a wife to help him share in his fortune. He assures Lily that his wife shall have more than she ever desired, and certainly enough to make every other society woman jealous.
Recognizing that he is declaring his marital intentions, Lily protests that she has never meant to give him the impression that she was interested in him romantically. Rosedale responds that he is aware that she does not love him, but that in time her love of luxury, style, and amusement will force her to recognize that they will make a good business and social match. He also reminds her that she is not going to be young and beautiful forever. In addition, he makes an allusion to the confrontation she has had with Trenor the previous evening.
Lily responds that she would be "selfish and ungrateful" to accept Rosedale's proposal only to fulfill her financial obligations. She uses this as a ploy to ask for time to consider his offer, and Rosedale leaves. Despondent that Selden has not kept his appointment, Lily writes him a letter, but, before she can send it to him, she reads in the evening paper that he has left New York on an extended cruise to Cuba and the West Indies.
She begins to write a letter to Rosedale, presumably to accept his proposal, but cannot bring herself to complete it. She receives a message from Bertha. The letter is an invitation to join the Dorsets on a Mediterranean cruise that is leaving the following day.
Although the events of the previous evening have upset Lily, her first thoughts upon awakening are those of the old Lily, annoyed at the discomfort she has suffered by sleeping in Gerty's austere surroundings. This irritation indicates that she will never be comfortable without the luxuries to which she has become accustomed. It is certainly implied that she would not choose to turn her back on an affluent lifestyle.
As Lily contemplates accepting Rosedale's proposal, she observes herself in the mirror. She recognizes that she is beginning to show signs of physical aging, and wonders, "when a girl looks old to herself, how does she look to other people?" She reconsiders Rosedale's offer, and the combination of her debts and her fears of looking older nearly induce her to write Rosedale to tell him that she has made up her mind to marry him. She cannot complete the letter, however, and is interrupted by the delivery of the invitation to join the Dorsets on their cruise.