Pros and Cons of Buy Now, Pay Later

Family finances

Buy Now, Pay Later (BNPL) options are an alternative to traditional credit that retailers are using to entice new customers and foster loyalty among existing ones. Companies like AfterPay, Klarna, and Affirm are reimagining online shopping. BNPL offers simple, interest-free installment plans that consumers pay back over a short period.

It’s no secret BNPL has become a popular checkout option since 2019. People like the chance to pay later and get free financing. While the allure of delayed payments and immediate cash is undeniable, buyers must exercise caution.

Consider these pros and cons before using buy now, pay later services.

Pro's

Con's

Split up Payments

One of the top benefits of BNPL services is that you can break up payments into smaller, less expensive amounts. It makes it possible to make a big purchase without having to have all the funds up front.

0% Financing

When you make your payments on time, many BNPL users get 0% financing.

No Credit Check

Not all, but some BNPL services do not check your credit before approving you. This gives younger consumers who are new to credit, a chance to have a financing option.

sFees and Interest

If you miss a payment, you may be charged late fees or interest. These can add up quickly, depending on the amount owed and how many you’ve missed. Just like traditional credit, if you stop paying, you may end up at a collection agency putting your credit score in danger.

Possible Overdrafts

BNPL services set up automatically scheduled payments, leaving room for potential checking account overdrafts if you aren’t monitoring your account. It’s important to make note of your BNPL payment schedule to ensure you have enough funds in your account to avoid late payments and potential NSF fees.

Easy to Overextend Finances

One pitfall of using BNPL services is that it can be easy to spend more than you have. Only paying attention to the cost of each payment, especially when you make several BNPL purchases, can easily rack up each month making it challenging to manage.

Returns Can Be Difficult

If you need to make a return after using BNPL services, you may be in for a headache. Unlike making a purchase with a credit card, funds get returned to the BNPL lender, which then get returned to you. While you wait for the return of funds, you are still required to continue making BNPL payments or face late fees and penalties. This may take weeks or months.

Miss Out on Rewards

When using credit cards, you may easily earn points or rewards. However, wen you use BNPL services you’ll forgo your rewards and potential other benefits.

Should You Use BNPL?

Whether or not you use buy now, pay later services depends on you. To responsibly use BNPL services, you should be prepared to pay on time, ensure you monitor your due dates, and not overextend your finances. If this is something you don’t think you are able to do, consider using other financing options such as credit cards, personal loans, and more.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.