Buy Now, Pay Later financing lets you spread out the cost of that purchase into a series of equal payments, often – but not always – interest free. Some BNPL services charge late penalty fees.
“Buy now, pay later is not a gift. It's a loan; It's a line of credit. It's the same as a credit card,” said Bruce McClary, a vice president at the National Foundation for Credit Counseling. “For people who are already having problems paying their bills on time, buy now, pay later programs are the keys to a car without brakes on the highway to insolvency. These are loans that have to be paid back like any other.”
Buy Now, Pay Later can sometimes be a smart way to shop. For instance, if it helps with cash flow. It can also encourage you to spend more. Two thirds of the BNPL shoppers surveyed by Lending Tree said that’s what happened to them.
Put another way: Just because you qualify for buy now, pay later, doesn’t mean you should use it.
Remember, there’s nothing wrong – and may be benefits – to using a credit card for your purchases, if you know you can pay off those bills when they arrive.
“As long as you’re avoiding interest, credit cards can be a better choice because they offer lucrative cash back and travel rewards programs,” said Ted Rossman, senior industry analyst with CreditCards.com. “Many credit cards also offer other benefits, such as extended warranty coverage and purchase protection.”
More Info: Should You Use Buy Now, Pay Later for Your Holiday Shopping?