Even when money is tight, that doesn’t make us stop wanting or even needing to purchase things. So when a Buy Now, Pay Later option is on the table, it can be tempting to take it. That’s not inherently a bad spending choice, but it’s important to take a few things into consideration before you jump at the chance.  

What is Buy Now, Pay Later?  

Chances are you’ve seen this advertised when you make a purchase online, and sometimes in the store. BNPL gives you the option essentially to make payments on a purchase overtime rather than all at once. Sometimes BNPL plans come with interest rates and fees, and other times those fees are only stacked on as penalties for not paying.  

When is BNPL a good option? 

Making payments overtime can certainly be a budget-friendly option. Especially if you have to make a major purchase you aren’t prepared to handle with an emergency fund. Financial experts recommend you really only utilize BNPL for truly needed items.  

When should you avoid it? 

There are a few things to really caution about BNPL. For one, you really do not want to be making payments on multiple BNPL purchases at once. This can really defeat the purpose and increases the risk that you will miss a payment overtime.  

Sometimes a BNPL will do a hard pull on your credit. If you are working on improving your credit score, this can penalize you. Some options may not check credit, and some may just use a soft-pull of your credit, which will not affect your score.  

What else to watch for: 

Read the fine print! You want to be aware of any fees and any penalties before you commit. 

Essentially, BNPL can be an OK choice, but we don’t recommend it across the board or lightly. Join us on Third Thursdays to discuss these and many more financial tips!