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Should You Buy Now, Pay Later

The Pros and Cons of Today's Options

The buy now, pay later (BNPL) concept has been around for decades. Furniture and electronic stores typically offered this kind of financing to lure budget-minded, credit-challenged customers. Today, smartphone apps have made it possible to use BNPL, like a credit card, to pay for unexpected, much-needed purchases or other immediate needs. Let’s take a look at the good and bad aspects of BNPL and when these options might work for you.     

BNPL Apps are Plentiful

While some BNPL financing is done in-store, much is done via a smartphone app. The most popular include Affirm, Afterpay, Apple Pay Later, Klarma, PayPal, Sezzle, and Zip. 

How BNPL Works

Essentially, once approved, a BNPL program allows you to make a purchase at a participating retailer with a small down payment and structured monthly payments. While every BNPL program has its own terms and conditions (some charge finance fees while others don’t), they all require that the temporary loan be paid back in full within a specified amount of time. Typically, this is within a set number of payments that must be automatically made from a checking or savings account. 

The Benefits Add Up

The BNPL option can help some people better manage cash flow by spreading out payments on more significant purchases. These kinds of loans are easier to qualify for than a credit card, and often have no interest payments. Additionally, some BNPL providers report on-time payments to credit bureaus, making this a good way to build credit history.  

There are Disadvantages Topping the list of cons for BNPL are industry regulations. While there are some consumer protections, they are not nearly as all-encompassing as those for credit card companies. Plus, there is a risk of overspending when using BNPL options due to the low monthly payments. This overspending can lead to a debt trap where borrowers continually roll late fees and past balances into new loans. Also, if a borrower misses a payment, they can incur some steep penalties and fees in addition to a ding on their overall credit. 

Not Everyone Accepts BNPL

Not all retailers and service providers accept BNPL programs. So, if you’re considering BNPL for an emergency expense or larger purchase, do your homework to ensure the place you want to shop is on board. 

There are Other Options

Consider a layaway program if you’re looking for ways to buy what you need without breaking the family budget. Instead of BNPL, where you get the item you want now, layaway programs put each payment toward the purchase of the item or service. Once it’s paid in full, you get the item or service. While it cannot help build credit, there is also no chance of late fees. Merchants that still offer layaway include Amazon, Baby Depot, Big Lots, and Marshalls. Credit cards are also an option. At Central Willamette, we have several cards to match your wants and needs. Choose from the Signature Rewards card, Platinum card, or Platinum Secured credit card

Free Advice is Always Available      

Central Willamette Credit Union is here to help you finance what you need, from refrigerators and tires to kitchen cabinets and heat pumps. If you want to get started or have questions please text or call: (541) 928-4536, visit a branch, or send us a message today!