From today’s NBC7 San Diego:
You’ve probably noticed a new way to pay when shopping online over the past few years. It’s known as “buy now, pay later,” or BNPL. The option is tempting if you’re trying to avoid racking up credit card debt, but it could also land you in trouble if you’re not careful.
Domenica Quintana said she uses BNPL when she wants to update what’s in her closet.
“It helps when you really want something and you don’t have all that money upfront,” Quintana told NBC 7.
Most BNPL lenders like Affirm, Klarna and Afterpay divide the total purchase into four automatic payments over six weeks, interest-free. There are longer-term loans too, but those could cost more than you think.
“Many of those longer-term plans do charge interest rates, sometimes as much or more than a credit card,” Ted Rossman with Bankrate said, “so that’s a bit of fine print that people need to be aware of.”
Rossman warned that, just like a credit card, if you are late with your payments, it could lower your credit score.
For the past few years, the Consumer Financial Protection Bureau (CFPB) has been looking into the impact the option has on buyers. Its conclusion? BNPL should be treated the same as credit card transactions and offer the same protections.
Read the complete story here.