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What is “Buy now, pay later?”

You’re about to finalize your online holiday gift purchase and you see a “buy now, pay later” payment option at checkout – though you’ve budgeted for your holiday expenses, the prospect of not having to pay for all these gifts right now sure is tempting. But is it worth it?

“Buy now, pay later” (BNPL) is a financing option that allows consumers to make a purchase and defer the payment for a later date. Instead of paying the full amount upfront, you can choose to break down the total amount owed into installment payments over time (bi-weekly, monthly, etc.) This payment method is often offered by third-party financial technology companies or integrated into the checkout process of online and even some brick-and-mortar retailers. Some common BNPL providers in the U.S. include Afterpay, Klarna, and Affirm. While the service may be convenient and allows you more time to stretch your budget, below are some key aspects that you should be aware of when considering whether to use a BNPL option.


Interest Rates and Fees

Some BNPL services offer interest-free financing if you make payments on time. However, they may charge outrageous interest or fees for late payments. Others charge high interest rates upfront for using the service. It’s crucial to understand the terms and conditions, including any potential costs associated with the BNPL arrangement.

Impact on Credit Score

Approval for a BNPL arrangement is often quick and usually does not require a traditional credit check. However, late or missed payments can still impact your credit score. It’s essential to make payments on time to avoid negative consequences to your credit profile.

Data Security

Consider the security measures in place with the BNPL provider, especially when providing personal and financial information during the application process through these third-party providers, external to the retailer you’re buying from. Choose reputable providers with strong security protocols.

Spending Discipline and Responsibility

BNPL can provide convenience and flexibility, but it also requires discipline and responsible use. Recognize that it is a form of debt, and evaluate your overall financial situation before making use of BNPL services. It’s critical to budget and ensure that you can make the required payments without causing yourself financial strain. Avoid taking on more debt that you can comfortably manage!


As with any financial decision, it’s crucial for consumers to thoroughly understand the terms, fees, and potential consequences associated with “buy now, pay later” arrangements. Being informed and making responsible choices will help you avoid the financial pitfalls associated with using BNPL services.

Your credit union offers affordable financing options too, such as a low-rate credit card or a convenient line of credit tied to your checking account. Our Member Advocate Specialists are always available to help you determine what might be the best choice for you!

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