This is the only feature I use ‘Buy Now, Pay Later’

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You might want to do something like that.


Main idea

  • Many consumers use the “buy now, pay later” plan to pay for special purchases.
  • If I need to buy something important and cannot pay directly, then I can turn to a BNPL plan.
  • Taking on debt can put you behind on payments, so it’s best to save and pay for a purchase directly, if possible.

The swipe method a credit card, build up a balance, and pay it back over time. But these days, buyers have more options for financing purchases thanks to the introduction of “buy now, pay last” planor BNPL plans.

BNPL plans allow you to put a down payment on a purchase and then pay the rest over a short period of time — usually 12 weeks or less. The benefit of using BNPL plans is that if you stick to your payment schedule, you won’t accrue interest or charges on your purchases.

That’s not the case when you carry a balance forward on a credit card. Let’s say you raise $2,000 in expenses and only have $1,000 to pay when your bill is due. As soon as you start the $1,000 up front, you will start compound interest up to. And even if you pay off the remaining $1,000 the next month, your premium will still end.

But while it’s easy to see why customers like BNPL’s plans, I’m not a fan of them. In fact, I can only see my signature for one instance.

An option best reserved for emergencies

I’ve always believed in the philosophy that if you can’t afford to pay for a purchase in full and it’s not worth it, you shouldn’t buy it. It’s simple.

Years ago, when I was just out of college, some friends went on an amazing trip that they financed by paying on credit cards. it’s true, for sure I wanted to join them, but I had no money. And I knew that if I paid off my travel expenses, I would end up paying for a long time, racking up a lot of interest, and potentially hurting my credit score (most credit cards can do that, even if you make your minimum payments on time every month). Instead, I stayed home, and they dealt with the resulting debt for months.

This is why I am not a big fan of BNPL’s plans. In my mind, they encourage consumers to buy things they can’t afford. But at the end of the day, when you owe a BNPL plan, you owe. And if you don’t keep up with that debt, it can have serious negative consequences.

So the only instance I use a BNPL plan is when I there was to pay for something in the short term but not afford. For example, let’s say my refrigerator goes kaput and I can’t directly exchange the cost of a new one. A refrigerator is something everyone needs, and it’s the kind of purchase you can’t pass up. In that case, if you don’t have money in mine cashierI am thinking of financing a refrigerator with a BNPL plan.

But I don’t use any of these plans to finance the purchase of a TV or new clothes. And neither should you.

Don’t go over your head

BNPL’s plans may seem like a big deal — until you find it difficult to keep up with the payments. So the next time you’re tempted by one of these plans, ask yourself if what you’re looking to invest in is worth it. If not, you better save the money and then move forward with that purchase.

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