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Over the last year, online shopping has become a necessity. If you’ve shopped online recently, you may have come across a new payment method called “Buy now, pay later.”

When you hear “Buy now, pay later,” it kind of sounds more like a slogan than a payment method. However, this method of payment has become extremely popular these days.

To help you get a better understanding of buy now, pay later plans, let’s go over what they do, which companies offer it, the pros and cons, and how to decide if it’s right for you.

What are buy now, pay later plans?

Have you ever wanted to buy something and pay at your convenience? Buy now, pay later (BNPL) plans let you do just that. These plans allow you to divide your purchases into four or more equal installments over a specific period. You need to pay 25% upfront and 25% after a specified period until your purchase is paid off.

These services work in a similar manner as credit cards. However, the good thing is that you don’t need to pay interest for splitting up the payments. If you need to purchase something but don’t have the entire amount, these plans can prove quite useful.

Which companies are offering buy now, pay later plans?

There are many companies that are offering buy now, pay later plans. Some of the best ones include:

  • Quadpay
  • Sezzle
  • Afterpay
  • Klarna
  • Splitit
  • Affirm
  • Billease
  • Slice
  • Four
  • PayPal

If you want to buy something without a credit inquiry, buy now, pay later is a great option. Those who do not want to pay interest and pay off purchases by making minimum payments can also benefit from these plans.

However, if you want to earn special discounts or cashback, a credit card may be a better option for you.

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Pros: What are the benefits of buy now, pay later plans?

Besides splitting up your purchases in equal installments, what are the other advantages of buy now, pay later plans?  Here are a few.


If you have been online shopping recently, you would have noticed that these payment options are available at checkout. It makes the entire transaction process quite easy and convenient.

All you need to do is select the named provider at checkout and you’re done. You do not need to fill out credit card details or go to your wallet to make the payment.

Most providers email you the payment plan so you are clear about when to make the next payment.

Fast and Easy Approval

Setting up an account on any of the buy now, pay later apps only takes a few minutes. There are also no credit checks, as in the case of credit cards. All service providers do is ask for a few personal details, including the account from which they will deduct the payments.

No Interest

You need not pay interest for splitting up your payments. However, if you are late in making payments, you may need to pay a late fee. To avoid this fee, make sure you have enough money in your account by the due date.

Credit Card Alternative

Millions of Americans own at least one credit card. However, lenders are extra cautious when extending new credit due to America’s financial challenges. Also, young Americans, most of whom also have student loans, have to wait longer to get their first credit card. As such, buy now, pay later plans can be an excellent alternative to credit cards.

Do you want to avoid paying high interest? Buy now, pay later plans may just be the right option for you. Although, it is always a good idea to stick to a budget. This will allow you to ensure that you make your payments on time.

Automatic Deduction

Have you ever missed a payment because you forgot the due date? If you have, then buy, now pay later plans will help you never miss a payment again. These plans automatically deduct payment from your account, so, you no longer have to worry about the due date.

Cons: What are the disadvantages of buy now pay later plans?

There are pros and cons to everything in life, and these apps are no different. Here are some of the disadvantages of these plans.

Impulse Spending

Did you realize you spend less when you have to pay in cash? With buy now, pay later apps, you can easily take home stuff without even spending a dollar. Although it sounds amazing, it may tempt some people to indulge in impulsive shopping and spend money you don’t or won’t have.

Late Fee

What happens if you miss a payment? You must pay a late fee. For instance, Afterpay charges $10 as a late fee if you miss a payment. If you fail to make the repayment within seven days, you will need to pay an additional $7. If you miss payments, you may end up paying a lot more than what your purchase was worth.

No Control Over the Payment Date

Unlike personal loans or credit card payments, you do not get to pick your payment date. Although buy now, pay later service providers will create a repayment plan for you, you may prefer to choose your own date. Wouldn’t it be better if the payment is deducted after payday? However, you have no control over that.

Impact Your Ability to Apply for Loans

Besides having to pay a late fee, not making payments on time could also impact your credit rating. If your credit rating is poor, you may not be able to apply for a mortgage, car loan, or even a credit card.

Is buy now, pay later the right choice for you?

Buy now, pay later plans are, without a doubt, very convenient. However, is it the right choice for you?

Before you choose a buy now, pay later plan, ask yourself:

  • Do you really need the item or do you just want it?
  • Is the payment within your budget?
  • Can you make payments every two weeks?
  • Are you okay with setting up automatic payments?

The answers will help you decide if it is right for you. Buy now, pay later plans can only be helpful if the purchases are within your budget and you can make timely payments.


Making smart financial decisions is a great thing. Being able to spread out your payments or minimizing your payments could help you plan ahead for the future. You never know what tomorrow may bring.

All things considered, deciding if “buy now, pay later,” is right for you will depend on your finances and your spending habits.


This article is for general educational purposes only and is not written by a financial advisor.

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