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Navigating the Pitfalls of Buy Now, Pay Later Financing

Navigating the Pitfalls of Buy Now, Pay Later Financing

A new Bankrate survey reveals that while four in 10 Americans have tried buy now, pay later (BNPL) options, over half of these users encounter issues such as overspending and missed payments. Ted Rossman from Bankrate highlights two key points for consumers considering BNPL: evaluate the total cost of ownership rather than focusing solely on installment amounts, and scrutinize the fine print, as terms can vary significantly. Offers may range from zero-interest payments over six weeks to longer plans with interest rates as high as 36%. Rossman warns that some longer-term BNPL plans might carry interest rates comparable to credit cards, contradicting the perception of BNPL as a gentler alternative. He advises using BNPL for single purchases and paying them off promptly to avoid the pitfalls of accumulating multiple BNPL plans, which can make it difficult to manage and track financial obligations.

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