Risks of Buy Now, Pay Later programs

As the holiday shopping season picks up, more and more consumers are opting for Buy It Now and Pay Later plans, which allow you to spread your bill payments over additional weeks, usually interest free. no fees.

Payment plans are offered by a growing number of retailers, including Amazon, Shopify, and Walmart, both online and in stores. The typical phased arrangement may allow you to make 25% of the purchase price and then make three equal payments over six weeks.

To provide these options, many traders have partnered with financial technology companies such as Affirm and Klarna. But banks, credit card issuers, and payment services including American Express and PayPal offer their own flexible payment plans.

About a third of buyers have used Buy Now Pay Later (BNPL) financing, according to a recent survey by Lending Tree, an online lending marketplace. Of those who opted for such funding, 62 percent said they had done so five or more times, and 81 percent said they would do it again.

“These are remarkable numbers for a relatively new product. Consumers love it, and it’s likely to stay there, ”says Matt Schulz, chief industry analyst at Lending Tree.

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