They’re not worth the risk.
The holiday shopping season is a busy time of year, especially when shopping for several people.
While flexible payment options are helpful, these tools are risky and can spell trouble.
How Buy Now Pay Later Plans Work
The name says it all.
You get everything you want without paying for it all at once.
Think of BNPL as a short-term financing option, also known as “alternative financing.”
Affirm and Afterpay are two of the most popular providers you’ll see while shopping online.
You pay nothing upfront or something like 25% of the total, then pay the rest later.
Even if you probably shouldn’t use it.
you might split a large purchase into four equal payments without paying interest.
Depending on the BNPL service you use, some even offer longer loans, upwards of 48 months.
What Happens When You Miss a Payment?
Unfortunately, these services are often used by people already struggling with bills or income.
Those are two different things.
Interest fees vary, but be prepared to spend a big chunk of cash if you miss a payment.
A hefty $1,000 purchase could cost you upwards of $1,300+ after payments and interest.
And if you have a longer loan with interest and miss a payment, that rate will skyrocket.
It’s a lose-lose unless you’re on time for every single payment.
Short-term buying power to get the things you want.
It’s the TikTok of shopping, with impulse buys and instant gratification.
That could instantly cause users to scramble to find funds or end up late.
And considering BNPL services aren’t regulated, you don’t get the same protections as a credit card.
Things like lost shipments, return policies, fraud, or damaged and defective goods.
you’re able to’t reschedule a payment and will be out of luck.
Should You Use BNPL Loans?
Plus,according to ConsumerAffairs, a third of Americans using BNPL have missed a payment or are behind.
At the end of the day, avoid these services.
And always pay attention to interest rates or late payment info.
Take all of that into consideration before your next impulse buy.
