5 Signs You’re Overusing Buy Now, Pay Later Plans


Buy now, pay later (BNPL) plans are similar to layaway systems with one big advantage: You don’t have to wait until you’ve paid for the item to take it home. Rules vary by lender, but typically, you pay about a quarter of the purchase price at checkout and then you can take the item home. You pay the rest back in three installments over the next six weeks.

These plans can be great alternatives to credit cards as there’s generally no interest if you keep up with your payments. But the old saying about too much of a good thing applies here. Relying too much on BNPL plans could come back to bite you in the long run. Here are five signs you may want to scale back your BNPL usage.

1. Using BNPL for everyday expenses

It’s possible to use BNPL for small, everyday items, but that’s not really the intended purpose. BNPL is supposed to provide short-term financial assistance to help you pay for big-ticket items you cannot afford to buy outright. It’s not supposed to become a habit.

2. Incurring a bunch of late fees

Ideally, you make all of your BNPL payments on time so you don’t incur late fees. Sometimes, you might slip up and forget one and it might not be a big deal. But if you’re habitually late on payments or skipping payments altogether, that’s a sign that your BNPL usage might not be sustainable.

3. Taking on debt to pay off your BNPL items

If you have to take out a personal loan or borrow money from others to pay off your BNPL items, you may want to think about putting a pause on your purchases for a while. Wait until you have paid off everything you currently owe before buying more.

4. Hiding your BNPL purchases from others

Some frequent BNPL users might feel guilty about how much they’re purchasing, and so they try to hide their BNPL purchases from others. This can be especially damaging if one spouse is keeping their BNPL debts hidden from the other.

5. Causing stress

Keeping track of a bunch of BNPL payments can be stressful, especially if they all have different due dates. If you find yourself anxious about juggling it all, that might be a sign that you should slow down on your purchases or look for alternative ways to finance your items.

Alternatives to buy now, pay later

If BNPL services are causing you any of the above problems, it might not be the best way to finance your purchases going forward. Here are some other options to consider.

Saving up

Saving up for purchases takes debt out of the equation entirely. However, it sometimes means you have to wait until you’ve set aside enough cash. This might not be desirable, and it may not even be feasible if you find yourself in a financial emergency.

Credit cards

Credit cards enable you to pay purchases off over time, similar to BNPL services. But you could face large interest charges if you don’t pay back the balance in full at the end of the month. There are credit cards that offer 0% introductory annual percentage rates (APRs) for new customers, though. One of these could be a good fit if you’re looking to finance a single, large purchase and are confident you can pay it back before the 0% APR period ends.

Personal loans

A personal loan enables you to borrow money without putting down any collateral. Because of this, interest rates are higher than on auto loans or mortgages. But you get a predictable monthly payment. It takes longer to get approved for one of these than it does for a BNPL service, though.

Be sure to evaluate all your options before you decide on the best way to finance your purchases. Keep in mind that the right choice for you right now might not be the right one in the future. It’s OK to change things up as long as you understand the financial implications of your decision.

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