Buy Now Pay Later (BNPL) services like Affirm, Klarna, and Afterpay have surged in popularity, especially during the pandemic, as they offer consumers the ability to spread payments over time. This flexibility can be appealing in an era of rising costs and household debt, which has reached an all-time high in the U.S. While BNPL services can make larger purchases more manageable, they come with potential pitfalls. Financial experts warn that these services may lead to overspending and increased debt for those who are already budget-challenged. Although some BNPL options offer zero percent interest and no late fees, others can charge interest rates as high as 30 percent. It's crucial for consumers to read the fine print and understand the terms before opting in. Additionally, late payments can negatively impact credit scores, similar to credit cards. Overall, BNPL services can be beneficial if used wisely, but consumers must assess their financial situation and spending habits before diving in.
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