Buy now pay later, also known as BNPL, sounds pretty attractive. This is particularly true with the state of the current inflation rate in the economy. The idea that you, as a consumer, can figuratively have your cake and eat it too when it comes to holiday shopping sounds too good to be true! Until you get to the fine print and find out that it is. Just like the pitfalls of store credit cards we’ve been warned about, BNPL can become a dangerous habit to fall into.
A Bluedot survey shows 40% of consumers are already planning on using BNPL services for the 2022 holiday season. Diving a bit deeper into the study, it was found that there is a correlation between age and the usage of BNPL. The younger the generation, the more likely to use BNPL. This can be attributed to the online and mobile shopping options available that are generally more popular with younger generations. And post-pandemic, the habit of online or mobile shopping has increased across all generations. Of those pressed further about their decision, the reasoning comes down to simply not having enough cash for the increased expenses.
Although some BNPL programs do not charge interest for spreading purchases out over time, the consumer is still taking on debt. Understanding the benefits of BNPL programs versus risks can help you make an educated decision based on the necessity of the purchase, fees or interest charges, and your money-spending patterns.
Some have no fees, no minimum credit score required, and are widely available. As appealing as those may sound, paying in installments is convenient until you have several debits coming out of your account throughout the upcoming weeks. You also may not get credit for making those payments on time with credit bureaus, even though some programs ask for your social security number among other pieces of personal information. And if there is an issue, say you lost your debit card that was the payment method for the next installments, who would you call?
This is where your credit union comes into play. Assess your financial situation. If you think there is a chance that you may overspend and are tempted to buy now and pay later, Columbine Federal Credit Union already has products available for you. Low-rate personal loans and credit cards can be helpful when it is time to splurge on loved ones for the holidays or any time of the year. Make an informed decision with people you already trust and who know exactly where you stand. We’ll also be transparent about what you will get and when it will all be paid off. This way you can be prepared to make a payment decision ahead of time, instead of whenever you click checkout.
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