If that wasn’t enough, there are plenty of scams to watch out for. Tap or click here for some of the biggest holiday-related scams making the rounds right now. Something else you might have noticed this year: all the “buy now, pay later” options showing up on your favorite retailers’ websites. Why worry about something right now that you can put off until later, right? On the contrary, keep reading to find out why these services might not be the best idea.
How BNPL works
“Buy now, pay later” services, or BNPL, seek to ease (or at least delay) some of the financial burdens that come along with shopping. Split the cost of something into equal payments, then pay it off on a schedule without the hassle of credit checks and traditional loan agreements. Depending on the company and plan, payment is often completed over the course of four installments and can be done weekly, bi-weekly or monthly. There’s usually a minimum purchase price to qualify for BNPL. These plans can make it easier to buy things you normally wouldn’t be able to in one go, which can be both an advantage and a risk. People who use BNPL plans tend to spend more than they can afford, according to business analytics platform CB Insights. The temptation is strong but it all catches up later. Other drawbacks include unexpected fees. For example, you may not pay interest upfront, but will do so later on in the payment cycle. A fixed fee will leave you paying more than you would if you purchase the merchandise outright, and keep in mind that fees and interest can go as high as 30%. Late payments can start low but add up to a chunk of the total purchase price. Here are some of the popular services and how they work: If you use Microsoft Edge, you might have noticed Microsoft added Zip as a way to pay for online purchases. User complaints range from browser slowdowns to the ethical implications of pushing shoppings to buy things they might not be able to afford.
Think it through
Most BNPL programs tout interest-free payments, so they’re literally banking on you being late in payments so they can hit you with penalties. Don’t use a BNPL service if you’re buying a luxury item or something you don’t really need. The debt can rack up quickly and you’ll have a hard time getting out from under it. Have a minute to spare? Listen to Kim’s take on “buy now, pay later” services by tapping or clicking here.
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