Beware of “Buy Now Pay Later” Trends
A growing trend known as “buy now pay later” (BNPL) is aimed at getting more dollars out of young people. While the convenience of an easy purchase does appeal to many shoppers, there are potential downsides that may not be apparent when a great article of clothing catches your eye. Some regulators are even warning that influencers are pushing these payment methods without sufficient warning to susceptible consumers.
What Is Buy Now Pay Later?
“Buy now pay later” has become a common method of payment based on credit for shoppers in the US and other countries. Generally, It allows you to pay for items in installments, making products you wouldn’t normally be able to afford immediately available to you. And who doesn’t love that? However, it is for this reason that shoppers should beware. There’s no such thing as free money, and any time you’re buying something you can’t afford, it’s a good time to take a step back, read the fine print, and determine whether making this purchase would be a smart financial choice for you.
The trend involves making payments over a short-term, fixed-payment schedule that may be interest-free. This allows you to spread the cost of your purchase over a period of weeks or months. It can seem like a great idea to someone who doesn’t have the cash at the moment but knows they will get it soon and really needs a special item they can’t quite afford.
Concerns Over BNPL
Most Americans already have some form of debt they are struggling to pay off. According to research by Equifax, BNPL users spend 51% more on clothes than online shoppers who pay up front, leading to concerns that shoppers are giving in to unhealthy temptations and spending more than they can afford.
While BNPL could be a win-win for someone who wants to get a special birthday or wedding gift in a pinch, it may not be a wise choice for people who are already financially vulnerable. Since customers are charged a fee for any missed payments, they may not understand the full cost of using BNPL in the long run. Just like with a credit card or interest payments on a loan, fees can build up over time if they go unpaid, making it increasingly difficult to pay off and leading to a growing cycle of debt.
Use Smart Financial Sense – and Services
Most people have been tempted to buy something they don’t necessarily need and can’t currently afford. Yet, because it is a relatively new trend, the necessary regulations may not have caught up to the industry. If any opportunity like BNPL presents itself, be sure to familiarize yourself with the terms and conditions before signing on. Unless you’re sure you’ll have the funds to make all your payments when they’re due, it just may not be worth the financial risk.
Meanwhile, keep in mind that Currency Exchanges offer many financial and auto services to help you stay on top of your finances. And unlike some services that prey on young people and other financially strapped shoppers, services at CCEA such as prepaid debit cards don’t rely on credit, are transparent and encourage healthy financial habits.
Check us out online or swing by to see how we help people cash their checks, pay their bills, and take care of other financial tasks.
With over 350 locations, many open nights, weekends, and holidays (and several stores with 24/7 availability), you can rest easy knowing your financial needs can be taken care of when you need them most. We’re in the heart of every community. Don’t believe us? See for yourself.