Buy Now or Pay Later?
By: Shane Weston
September 19th, 2021
Buy now, pay later. This new digital payment method has been growing in popularity. Apps like Affirm, Paypal, and Afterpay have seen an increase in revenue due to its high demand. A recent study found that 56% of Americans have used the buy now, pay later service. As the service continues to expand its growth, Americans need to be aware of the financial impact it could have on them.
We have seen the credit card problems consumers have dealt with, and this type of digital payment may follow suit. The payment method may offer interest free installments to its customers, but it may not be a habit you want to keep. The service promotes an exit door from the realization that you cannot afford a product or products right now. It also can become addictive. In addition, missing payments can become an issue. Late fees can be very expensive and will hurt a customer's credit score.
Financial planners have become worried about this high usage because it goes against their importance of keeping track of monthly payments. The purchase puts the customer immediately in debt and forces them to be responsible. If responsible, using this method for emergencies and those that have little credit may find it a convenience.
Overall, the decision comes down to the customer. Whether they prefer to pay on site or defer their payment to a later date, consumers need to be cautious on how this can affect them financially.