CREDITBUDGETING

Buy Now Pay Later: What You Need to Know

Buy now pay later (BNPL) offers are becoming popular with retailers around the globe. If you aren’t familiar with the term, BNPL services aim to make it easier for people to make purchases on websites now and pay for them over time. Sounds pretty similar to a credit card, right? That’s because it is very similar to a credit card except some BNPL options don’t charge interest or fees.

How do they work? You click the option to buy now pay later and it’s a win for everyone. You get your item today and can pay for it over time, the retailer gets the sale, and the BNPL company earns a fee from the retailer.

One of the biggest pros to using a BNPL option is you can make purchases now and payments later without an inquiry on your credit report. Some BNPL offers also allow you to make payments with zero interest, and some even help you build your credit without getting a credit card.

One downside is you must read the small print with these BNPL providers, because they differ from company to company. These differences could include fees assessed, signer requirements, or interest accrual. Make sure you do your research and make the offer work for you! One last thing to keep in mind with a BNPL option is using this service for multiple purchases — those small payments add up and create a negative impact on your monthly budget.

Sources:

https://www.investopedia.com/best-buy-now-pay-later-apps-5186864#toc-when-to-use-a-buy-now-pay-later-app-vs-a-credit-card

https://www.experian.com/blogs/ask-experian/pros-cons-of-buy-now-pay-later/