3 Little-Known Benefits of Using ‘Buy Now, Pay Later’ Wisely

When you want to buy something, do you choose cash, check, or credit card? If you buy today, you have other options. Buy now, pay later (also known as BNPL).

This payment method has been around for a long time, but in its current form, some of the biggest names in the industry like Affirm and Afterpay emerged about a decade ago. Despite the ubiquity of BNPL, it has actually declined in popularity among Americans recently. In fact, 35% of people surveyed by The Ascent about BNPL services said they had made a purchase using them. This is a decrease from 50% in 2022 and 56% in 2021.

Unfortunately, some people have reported experiencing issues. 26% reported missing payments. BNPL services make it all too easy to end up spending money you can’t afford because you only pay for a portion of your purchase initially and then pay for the rest. However, if you use BNPL carefully, you can enjoy some nice benefits. Here’s how:

1. 0% financing – no credit check

In most cases, if you are looking to finance a purchase with a 0% APR (in the form of a credit card or traditional loan), the lender will request personal information to complete a credit check. And that will be a hard credit check that can affect your credit score and drop it by a few points.

Your credit score will be restored, but the great thing about BNPL plans is that some companies that offer the service don’t require a credit check at all. and if you can pay in full on time (this means absolutely important You can’t) You’ll get virtually 0% financing on purchases you can’t afford to pay for all at once.

2. Simple repayment terms

Credit cards can be useful financial tools, but one characteristic that makes them a bit confusing is how they pay. To avoid paying interest and going into debt, it’s best to pay off your card balance in full each month. But when you get your monthly card statement, you’ll know that you only have to pay the minimum amount based on your balance. Of course, if you only pay the card issuer for the minimum benefit, you’ll end up making more money in interest charges.

BNPL payments work differently. When you purchase something using this type of loan, the total cost is usually divided into several equal payments. You must make your first payment at checkout, and make remaining payments periodically (e.g. every two weeks) until your purchase is paid for. Taking advantage of easy repayment terms can be a definite advantage of BNPL.

3. Convenient accessibility

I’ve been surprised lately by how many retailers and other businesses are offering BNPL payment options. Previously, access to BNPL payment options was limited to a few online merchants. However, popular retailers with both online and brick-and-mortar stores are partnering with BNPL companies to allow consumers to use this payment method to make purchases in-store, including Pottery Barn, Target, and Macy’s.

I love online shopping and almost always choose to purchase through a company’s website rather than visiting a physical store. But for those who make a lot of their purchases in person, BNPL provides convenient access to other ways to finance their purchases. And now you can even use BNPL to pay for travel. But I don’t recommend it.

If you are in good control of your finances and are confident that you can make BNPL payments, this payment method can provide you with significant benefits. To get the most benefit, keep track of how much you owe and make sure you can repay it in full.

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