7 Risks of Relying on ‘Buy Now, Pay Later’ This US Holiday Season

The ‘Buy Now Pay Later’ or (BNPL) services may be the only possible option to stagger payments as the Black Friday and festive season commences. Some of the probable drawbacks of such arrangements may include spending more than had been planned, there being many concealed costs associated with these arrangements and credit problems. To prevent financial stress and make sure your holiday purchases fit inside your budget, it is essential to be aware of these drawbacks. Despite their seeming convenience, consumer experts caution that these programs have drawbacks.

1. Easily Overspending

Melanie Musson, a finance specialist points out that internet purchases can account for more outlay than originally intended. The buy now, pay later plan has one fundamental disadvantage – the spending with money that you do not have is virtually impossible. BNPL plans typically don’t require a credit check to get accepted. All you need to do to get accepted is sign a document acknowledging that you agree to the terms of repayment,” she explained.

Musson advised customers to only use their available funds. “You shouldn’t purchase anything if you lack the funds to do so. You will be behind on your next paycheck if you have debt. You’ll spend your money trying to catch up rather than using it to work for you,” she said.

2. Expensive Fees

Musson clarified that there may be further debt if BNPL plans are not paid off. She stated that customers typically have a few months to repay the loan under the buy now, pay later options. You will also incur other charges plus interest in case you are unable to make the payments on time. The customers are parting with more money in this case than would be the case if they had bought the products.

3. Purchases Are Not Safe

According to Petosa, credit cards provide a number of safeguards for users. With BNPL plans, this isn’t true. She said that BNPL providers set their own terms, which might vary greatly, in the absence of strict supervision. This lack of oversight means fewer consumer rights and more chances of getting into a bad situation for people who aren’t careful.

4. Difficult Returns

Never every purchase is worthwhile. However, returning an item can be difficult if you’re a part of a BNPL plan. According to Anna Petosa, an executive of SwagDrop, “when you buy with BNPL, you’re often still responsible for making payments while the return processes, unlike a straightforward credit card return.” “Missed payments, additional costs, and hassles just to get your money back can result from this delay.”

5. Payments can build up

The costs might mount up if customers use BNPL programs on a regular basis. When shopping for the holidays, some people may even lose track of how many plans they’ve participated in and how much they owe, which can be problematic in the new year.

According to Alex Smith, founder of A Couple Consumers, “consumers who tend to BNPL end up doing it over and over again, racking up more debt and could end up owing hundreds or even thousands of dollars down the road.” “When they see their newly added monthly bills, it obviously becomes a problem because they might not have the money.”

6. Limited Protections for Consumers

You usually have rights when using a credit card that allows you to challenge charges for goods that are flawed, misrepresented, or not delivered. These protections are frequently absent from Buy Now, Pay Later (BNPL) plans, though. Even for a defective goods, you may still be responsible for the installments if the vendor is uncooperative.

7. Unstated Fees and Perplexing Phrases

The terms and conditions of certain BNPL plans might be confusing, and some of them have fees or charges that aren’t immediately apparent. Customers could not read or understand the fine print completely, which could result in unforeseen expenses. Installment fees, for instance, could increase the cost of the goods compared to paying for it all at once.