Consumer Reports: “The Risks of Buy Now, Pay Later Programs”
Consumer Reports, Nov. 30, 2021 — Marguerita Cheng, CFP® Pro is featured in today’s article by Penelope Wang who explains: As the holiday shopping season shifts into overdrive, more and more consumers are opting for buy now, pay later plans, which let you spread out your bill payments over additional weeks, usually with no interest or fees.”
The payment plans are offered by a growing number of retailers, including Amazon, Shopify, and Walmart, both online and in stores. The typical installment arrangement might let you put down 25 percent of the purchase price, then make three equal payments over six weeks. To provide these options, many merchants have teamed with financial technology companies such as Affirm and Klarna. But banks, credit card issuers, and payment services, including American Express and PayPal, offer their own flexible payment plans.
About one-third of shoppers have used buy now pay later (BNPL) financing, according to a recent survey by Lending Tree, an online lending marketplace. Of those who opted for such financing, 62 percent said they had done so five times or more, and 81 percent said they would do so again.
Rita warns: “You want to make sure you really have the money set aside for those bills when they come due.”