Buy Now…Beware Later

Want that pair of shoes you have been coveting, or upgrade your sleep digs with a new mattress

Shoppers now have another payment option when checking out called Buy Now Pay Later (BNPL). When shoppers select BNPL financing, they receive the goods but can stretch out payments over time. And unlike credit cards, shoppers generally may not need to go through a qualification process associated with credit cards.

Retailers are embracing Buy Now, Pay Later (BNPL) financing. BNPL users tend to skew younger and female, primarily because BNPL providers concentrated on female-focused e-commerce brands. You may recognize some of these names from your online shopping cart: Affirm, AfterPay, Zip (formerly Quadpay), Klarna, Sezzle, and PayPal.

While it may seem like a great option to select BNPL financing when checking out, here are a few things to think about before opting for BNPL:

  • Creating debt. You are financing today’s spending with tomorrow’s dollars. The temptation with BNPL is to use debt to overextend yourself and potentially pile new debt on top of old. If you spend money you don’t have, you could end up with a debt that takes years to pay off.
  • Wants not needs. Typically, shoppers use BNPL financing for wants not needs. BNPL financing can make impulse buying easier and result in more debt outside of credit cards limits. When the payments amounts are small, our brains say, “Hey, that is not so bad. I can afford that!” But what happens is this debt can snowball and negatively impact budgets and undermine savings goals.
  • Buy Now Pay Later loans are not handled by the merchant. Returns and refunds can get complicated. For example, if you buy a new TV for the big game and return it, the merchant will not issue refunds. You will need to request the BNPL provider to issue a refund to your account. In some cases, if the BNPL loan payment includes interest, you may not get that back.
  • Terms and conditions. These vary across providers. Like any other financial product, do your due diligence and make sure you understand your responsibilities and obligations.

Before you agree to Buy Now, Pay Later financing:

  • Sleep on it. To avoid or control impulse buying, give yourself a 24-hour space between window shopping and purchasing. Space and time may provide time to realize you didn’t “need” to buy that item anyway.
  • Plan to spend. Save up for that purchase. Then you will have guilt-free and debt-free spending.

It is appealing to buy and receive your purchase now, then pay for it over time. But make sure you know the terms and conditions before you agree to BNPL financing. Clarifi is here to help navigate debt and repayment. To contact us, call 1-800-989-2227 or go to