Buy now, pay later?

25 Nov Buy now, pay later?

While shopping online recently, I have noticed more and more websites with a “buy now, pay later” feature at check-out. This feature allows the buyer to receive their item now, but pay over time – usually four equal payments, interest-free, two weeks apart. Thus, a purchase of $100 can be split into four payments of $25 each. While this may seem like a great way to spread out the cost of an item so you get the product you want right away without paying in full right away, I recommend running in the other direction when you see this option, for three reasons:

1. Allowing you to split the cost of your item over four payments could encourage you to spend more than you have in your budget or can afford. It’s so tempting to want to purchase more than we should and to rationalize it since the payments are not due right away.
2. This is another form of debt. In two weeks’ time, your debit or credit card is going to get charged for the next payment. If you are working to get out of debt, you have just added to it. It may be short-term debt, but it’s still debt.
3. If you pay by debit card and don’t keep much in your bank account, you could cause an overdraft when your second, third, or fourth payment hits, costing you far more money in fees!

When shopping — online or in person — be sure to use and stick to a budget, and only spend what you have. While the “buy now, pay later” feature might sound awesome, it’s actually awful.