Holiday Shopping? Read This Before You Use Buy Now, Pay Later

Buy now, pay later makes shopping feel easier, but the small payments can add up fast. Know the risks before you click.

Buy now, pay later (BNPL) is a short-term financing option that lets customers pay for purchases over time—like a loan—rather than in full at checkout. You typically pay a portion upfront, then the rest in equal installments. Popular for online shopping, BNPL is now appearing in more physical stores.

Unlike traditional loans, most BNPL plans don’t charge interest when payments are made on time and often come with minimal fees. They also typically use a soft credit check, so applying won’t affect your credit score. Here are some key pros and cons to consider:

Pros of Buy Now, Pay Later

  1. Interest Free Payments: Most plans charge 0% interest if you pay on time.
  2. Soft Credit Check: Applications generally don’t affect your credit score.
  3. Flexible Payment Options: Allows consumers to split payments up into smaller, manageable installments. 
  4. Fast Approval: Quick and easy to set up right at checkout.
  5. Helps Budget Short-Term: Spread the cost of essentials without relying on high-interest credit cards.

Cons of Buy Now, Pay Later

  1. Overspending: Easy to take on more debt than you realize, especially with multiple BNPL plans.
  2. Late Fees and Penalties: Missing payments can trigger fees or interest, making the purchase more expensive than planned.
  3. Limited Consumer Protections: BNPL services may not offer the same protections as credit cards, such as dispute resolution or fraud safeguards. 
  4. Impact on Credit Score: On-time payments often aren’t reported, but missed payments are—and they can hurt your score.
  5. No Rewards or Perks: Unlike credit cards, BNPL typically doesn’t offer cashback, points, or other loyalty benefits. 

Avoid Holiday Debt with BNPL

BNPL can make holiday shopping feel more affordable—but those small payments add up. It’s easy to lose track, especially if you’re juggling multiple plans. Late payments mean fees, and some shoppers even sacrifice essentials to keep up. Before you click “pay later,” ask yourself if the gift is worth the financial stress. A thoughtful present doesn’t need to come with a payment plan. 

The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.