Buy now, pay later everywhere. Should you sign up? | Smart Change: Personal Finance

Plan structures vary by company, but one of the most common is to divide your purchases into four equal installments, with the first installment due upon payment and the remaining three installments two weeks apart.

For example, if the total amount is $200, you’ll pay $50 at repayment, then three $50 installments over six weeks. These installments are often automatically paid to the debit or credit card you used to make the original payment.

Unlike credit card issuers, many buy now, and later companies don’t pay a hard credit withdrawal when placing an order. They may make a weak withdrawal, which won’t affect your credit score, or – in the case of Afterpay – they may not check your balance at all.

Since they don’t need strong credit, Buy Now, Pay Later plans are accessible to shoppers who don’t have a credit history or bad credit.

Many plans also do not charge interest, which means that if you pay on time, you will only pay the cost of the purchase. But it is not guaranteed. Although Affirm does offer interest-free financing, depending on the retailer, they can charge up to 30% interest.

Is buying now and paying later a good idea?

Whether you should sign up for one of these payment plans isn’t cut-and-dry, but here’s what to consider.

Buy now, pay later for businesses that earn money in part by charging merchant fees. They can do this, the argument goes, because they bring more business to the merchant — in other words, shoppers buy more thanks to their service.


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