Is Buy Now, Pay Later a Good Idea?

Quick Answer: Buy Now, Pay Later Worth It?

Buy now, pay later (BNPL) can be a handy way to split up a purchase, but it is still a loan. Miss a payment and you may face late fees and a lower credit score. Use it for things you would buy anyway, that fit your budget, and that you plan to keep.

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Watch: Is Buy Now, Pay Later Hurting Your Credit? 5 Hidden Risks

In this Making Money Manageable episode, Allen Dembski and Juliana Janson break down what to think about before you choose “pay in 4” at checkout.

The Quick Version

• It’s a loan, even if it doesn’t feel like one. Small payments and no interest can make BNPL feel different from a credit card. It isn’t.
• Late payments can cost more than a fee. A missed payment could hurt your credit score, and that can ripple into other costs, including what you pay for insurance in some cases.
• More apps, more due dates. Using three or four BNPL services means more logins and more chances to miss a payment. Setting payments to come out of your account automatically can help.
• Returns get messier. If you send something back, you may still owe payments until the store and the BNPL company sort out your refund.
• On-time payments can still matter. Several open plans add to your total debt, which a lender may review when you apply for a bigger purchase down the road.
• “Interest-free” isn’t guaranteed. Many plans charge no interest, but some do. Read the fine print.

4 Questions to Ask Before You Click “Pay Later”

Would waiting and paying in full cost me less?

Would I buy this if buy now, pay later weren’t an option?

Do the payments fit comfortably in my budget, even if my income dropped?

Is this a need or a want?

Stay tuned for our next post.