Buy Now, Pay Later: Experts say ease of payment is convenient, but could overwhelm shoppers during holiday season
Payment plan is free to use, but late fees and missed payment fees apply
InvestigateTV - According to the Consumer Financial Protection Bureau (CFPB), from 2019 to 2021 the amount of money spent using Buy Now, Pay Later financing grew over 1,000% from $2B to over $24B.
By Now, Pay Later is when you finance a small amount, typically $50-$1,000, interest free, over the course of four payments over six weeks, with the first payment coming when you make the purchase.
There is no cost to use Buy Now, Pay Later, but there could be fees for missed or late payments.
Kim Palmer with NerdWallet pointed out that the challenge for consumers is it’s still a form of debt.”You still have to pay it back and it can be overwhelming, especially when you’re signing up for multiple buy now, pay later purchases,” Palmer said.
She pointed out the payment plan could be useful, especially if you suddenly need to make an essential purchase and you have no other way to fit it in your budget.
“But when we’re talking about the holiday shopping season, it can be really dangerous because you’re making all kinds of purchases that are not necessarily essential, and you want to try to avoid taking on so much debt that it makes it hard for you to pay it back,” Palmer said.
She said instead of turning to credit cards and Buy Now, Pay Later services this holiday, have a conversation with your family and friends about scaling back this year. She said we’re all facing financial stress this year from inflation and economic uncertainty, so tempering expectations and restraining your budget may be your best move right now.
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