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What if you really want or need a product but your current finances can’t justify the purchase? That’s where a buy now, pay later (BNPL) service might come in handy. Certain products might be a bit over your financial limit, but with a BNPL service, you don’t necessarily have to wait until your bank account has the funds to cover the purchase. Retailers are increasingly offering this type of service to help consumers get over the financial hurdle and encourage more spending, but do these services come with a cost?
Let’s take a closer look at BNPL services to help you decide whether it’s worth it to use.
Buy now, pay later (BNPL) is a financing service that allows consumers to buy a product without having to pay for it in full. This arrangement is especially helpful when making large purchases of a few hundred dollars or more.
Several companies offer this type of financing service on purchases made at participating retailers and don’t typically charge any interest. Some credit card companies also offer this service at lower interest rates compared to the typical variable APR charged on balances.
While financial companies that offer BNPL services may have their own specific set of terms and conditions, this program generally works as follows:
Being able to pay for an expensive product without having to cover the entire cost upfront is advantageous for consumers who otherwise wouldn’t have the available funds necessary to complete the transaction. That’s the beauty of a BNPL service.
But there are also some drawbacks to consider, including the following:
While there may be some drawbacks to BNPL services, that doesn’t mean you can’t avoid them. Consider the following tips to steer clear of the dangers that may accompany these financial services:
There are several resources for BNPL programs available, including the following:
Fees may be charged for a payment that doesn’t go through.
PayBright offers 2 different BNPL structures:
Pay in 4:
Pay Monthly:
Interest or processing fees may apply depending on the retailer. Interest can range anywhere from 0% to 29.95% APR. Further, some plans may include a monthly processing fee with each payment.
Learn MoreFees could be charged for late payments, though Afterpay will work with consumers to help make arrangements in case a payment is missed.
Learn MoreThere are plenty of reasons why BNPL services may be worth considering:
If you’re responsible with your finances, a BNPL service can be a great way to make a large purchase that you might not have the available funds to cover right away. But if your debt load is already sky-high and your finances don’t support additional bill payments, it might be best to wait until you have enough money saved up to cover the purchase in full. This way, you can avoid any financial traps that can be tough to get out of.
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