SAN ANTONIO – Buy now, pay later is a payment option that’s becoming more popular among online shoppers to buy clothing, electronics, gym equipment and even vacations.
The service has become so popular that a recent Credit Karma survey found it has been used by 42% of Americans.
The Consumer Financial Protection Bureau says buy now, pay later allows shoppers to set up payments with little to no money up-front for purchases. The items can range from less than $100 to several thousand.
Buy now, pay later providers require applicants to be at least 18, have a mobile phone number and a debit or credit card to make payments. They must also be able to validate your identity.
Once you’re approved, the purchase will be sent to you, and the cost will be split up into biweekly or monthly payments until the balance is paid in full. Approval takes minutes, with no interest or finance charges.
While the payment service is convenient, the CFPB offered the following factors to consider before using it:
First, make sure the payments fit into your monthly budget.
Next, do your research to find out if a buy now, pay later company reports to credit bureaus. If you make a late payment, it could harm your credit history.
You may also face late fees if you miss your due date. Beware of overdraft fees if you don’t have enough funds to cover an automatic payment.
You should also consider that buy now, pay later may not offer the same protections as a credit card. This may make it harder to dispute scams or return merchandise paid for with the service.
Finally, compare the buy now pay later service to other payment options for which you may be eligible.