Buy now, pay later (BNPL) plans have gained popularity as a convenient payment method at checkout, both in-store and online. These plans, often featuring options like pay-in-four, divide purchases into manageable installments without interest or hard credit checks. However, it's crucial to understand that BNPL plans are essentially loans, which can lead to financial strain if not managed prudently. The Consumer Financial Protection Bureau’s new rule, effective May 2024, categorizes BNPL lenders as credit card providers, granting users additional protections such as the right to refunds on returned products. To use BNPL wisely, consumers should strategically plan their purchases, ensuring they can afford the payments within their budget. Overextending by taking on multiple plans can be risky, as BNPL lenders typically don't report payments to credit bureaus, making it easy to lose track. Keeping organized through budgeting tools and paying on time is essential to avoid fees and potential credit harm. Additionally, selecting the right payment method and thoroughly understanding the terms of each BNPL plan can prevent unexpected costs and financial pitfalls. By following these tips, shoppers can leverage BNPL plans effectively without compromising their financial health.
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