A Deep Dive into Buy Now Pay Later

A Deep Dive into Buy Now Pay Later

If you’ve done online shopping recently, you might have seen options to buy now and pay later. 

Um, what? How does this work? 

Especially for more expensive goods, a BNPL option is becoming increasingly popular. Companies like PayPal or Visa have begun offering options for buy now, pay later. 

Hold up. If one can make payments over time for good with no downside, the concept seems too good to be true. 

What’s the catch?

Buy Now Pay Later - Good or Bad?

Whether you consider buy now pay later to be good or bad depends on your own situation. Important info could include your finances, payment preferences, and experience with traditional forms of credit. 

Surprisingly, not all buy now later firms charge interest. Some charge none at all. These firms offer another way consumers can pay for the goods they would otherwise pay in full. You just pay a regular payment over the specified period after an initial payment. 

Of course, some firms do charge interest. Before you cash out on that Hollister, ensure the interest won’t break the bank. 

That said, buy now pay later interest may come out less than credit card debt. If the interest rate on your credit card debt is high, consider a buy now, pay later option. 

We’re just trying to save you money.  

is buy now pay later for you

Buy Now Pay Later Popularity is Increasing 

Word is spreading. 

In 2020, the usage of buy now pay later has more than doubled and is extra widespread among younger ages. More than 10% of the US population has used the buy now, pay later option.

Need better credit? Don’t fret. The option’s popularity comes from its low or no interest rates and convenience. The service requires no credit examination: it’s an option widely accessible to any consumer. 

Does that mean you can buy the items and run? Not exactly. Failure to pay off your products can result in hefty fees or penalties. We don’t recommend it. 

The Geographic Spread of Buy Now Pay Later

Buy now, pay later first saw popularity in Europe and Australia. Due to regional differences, some benefits are different. 

In the United States, buy now pay later allows a person to purchase a good and make lower payments over time. In Europe, consumers can use the buy now pay later option to return something before they pay it in full. See the benefit?

We imagine America’s system might become similar to Europe's. That’s good news. You’d have more flexibility to see the product in person before you decide to pay in full. 

should i use buy now pay later

Should I Use Buy Now Pay Later

Even if you’re excited, don’t go buying everything in sight. 

Buy now and pay later depends on your situation, your credit comfortability, and the pluses and minuses of different credit options. Be tactical here. 

While it might make sense to use the buy now, pay later option on one occasion, we don’t recommend it consistently. These purchases add up. Make sure you budget and keep track of your finances. 

Credit Scores and Buy Now Pay Later 

You may wonder: “How do buy now pay later companies report utilization to credit companies?”

If so, we trained you well. 

There is no current effect of buy now pay later utilization on credit scores, but that could change. 

The top three US credit agencies have begun work with buy now pay later companies but haven’t agreed on a  standardized reporting procedure for credit scores. Thus, the lag. 

The communication shows just how new this industry is. We’re sure we’ll see it in time. 

The Future of Buy Now Pay Later 

Without regulation, how long can buy now pay later last? 

Most buy now pay later companies have only existed so far in an environment with low-interest rates. Now that interest rates have risen, it’s unclear what the effects will be among consumers considering whether to pay now or later. 

The logic is simple. When interest rates were low, buy now pay later services charging interest rates were cheaper. Now, using buy now pay later services are more expensive. This may cause a decrease in consumer demand for buy now, pay later payment options.

Buy Now Pay Later in a Nutshell 

Simply put, buy now, pay later is a fast-growing payment option for e-commerce. You're likely seeing it in the United States, Europe, or Australia. 
But whatever payment plan you go down, get your ducks in a row. Track your finances and stay knowledgeable. Remember, there’s nothing better than being financially literate.

When you’re looking for info, lean on EXTRA. We’ve got the best insider advice. Our expert blog stuffs all the finance info you need to keep your wallet game strong. Explore a few of our choice suggestions, like the best debts to pay off and the best ways to build credit young.
Whether you’re paying now or later, we’ll get you to the top in no time. 

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