7 Ways to Avoid Buy Now Pay Later Regrets

The concept of buy now, pay later (BNPL) isn’t new. In the past, furniture stores, electronic retailers, and tire shops used BNPL to convince people to buy what they needed today. When the cost was divided out over months or even years, people were able to buy what they wanted and pay for it later. Today, smartphone apps have brought BNPL back into the spotlight. Here’s how BNPL works today and how you can use it to your advantage. 

How Does BNPL Work in the Real World

The most popular BNPL apps include Affirm, Afterpay, Klarma, Sezzle, and PayPal. To get access to BNPL financing, all you need to do is download the app, get approved, and then visit a participating retailer. The BNPL lender will then pay for the item you want, collect a down payment (when applicable), and then start pulling weekly or monthly payments from your bank or credit union account until the loan is paid back in full. It can be an easy way to borrow money. Best of all, many BNPL lenders don’t charge interest payments. However, there are significant fees for late or missed payments.  

Here are some of the ways BNPL can work for you. 

1. Build credit. As long as you don’t miss a payment, the BNPL lender will say good things about you to the reporting agencies. 
2. Make necessary purchases without loan interest. Most BNPL lenders do not charge interest on their loans, unlike credit cards. This allows you to buy what you need without spending more. However, late fees can be significant and add up fast. 
3. Manage cash flow. Expensive purchases can put a financial strain on any budget. BNPL allows you to keep your cash for emergencies while still buying what you want and need. 
4. Choose your payment schedule. Instead of being locked into the first or middle of the month, some BNPL lenders allow you to pick when payments are due. 
5. Shop with confidence. While the number of retailers that work with BNPL lenders is limited,  the ones that do honor BNPL may also offer special warranties and promotions to save you money. 
6. Avoid overspending. Using BNPL apps can help prevent impulse purchases. That’s because you’re limited to what you can buy.   
7. Honor your budget. Weekly or monthly payments can help you buy what you need without breaking the family budget. 

Boost Your Financial Wellness

More Financial Wellness Matters blogs on topics ranging from financial self-care to protecting your financial health are coming soon.  Twice a month, we’ll dig a bit deeper into the relationship between financial health and overall well-being, shedding light on the behaviors and beliefs that drive money relationships. With simple tips and proven insights, we hope to enhance your financial well-being and help you live a healthier, happier life.