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Pay later services simply aren’t worth the risk.

The holiday shopping season is a busy time of year, especially when shopping for several people. Whether you’re getting gifts for others or buying yourself something nice, you’ll likely see those options to buy now and pay later with Affirm, Afterpay, Klarna, or even PayPal’s installment plans.

These are known as Buy Now Pay Later (BNPL) plans, which exploded in popularity over the last several years. According to data from Adobe, during Black Friday and Cyber Monday in 2022, usage of BNPL surged by 88%, which is a bit troubling.

When you can quickly make a small payment upfront yet still buy everything or add more items to your cart, it’s easy to spend more than you can afford. While flexible payment options are helpful, these tools are risky and can spell trouble.

Here’s what you need to know about buy now and pay later plans and why you should avoid them.

How Buy Now Pay Later Plans Work

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The name says it all. You get everything you want without paying for it all at once. Think of BNPL as a short-term financing option, also known as “alternative financing.” Affirm and Afterpay are two of the most popular providers you’ll see while shopping online.

How each works varies slightly, but the general idea is the same. In a matter of minutes, you can apply, get qualified, access funds, and you’re all set. You pay nothing upfront or something like 25% of the total, then pay the rest later.

Better yet, these services often don’t run a credit check or report on your credit, making it available to everyone. Even if you probably shouldn’t use it. And unless it’s a big loan, it won’t report on your credit, so these services typically can’t help build credit.

Afterpay is a popular option that asks for 25% first, then will let you pay another 25% every two weeks, like on payday, which is helpful for people on a budget. You can split a large purchase into four equal payments without paying interest. Depending on the BNPL service you use, some even offer longer loans, upwards of 48 months.

Buy now, pay later plans are so popular that it’s even available with select items on Amazon, Apple, PayPal, and others. And while all of them claim you can buy stuff “interest-free,” that’s not entirely true, especially if you miss a payment.

What Happens When You Miss a Payment?

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These services say things like, “Financial wellness is a tap away” or “buy what you want with no fees or surprises,” which sounds nice, but it is certainly deceiving.

Unfortunately, these services are often used by people already struggling with bills or income. If you miss a payment, you’ll get charged interest, even if the company doesn’t charge late fees. Those are two different things. All it takes is forgetting once or being late, and now you’ll be spending more money than the item originally cost. Interest fees vary, but be prepared to spend a big chunk of cash if you miss a payment.

While the primary use for BNPL is fast loans you’ll pay back in 3-4 payments with zero interest, bigger purchases or longer loans may have interest charges. In fact, on a big purchase, you’ll likely need to qualify first, and the interest rate could be as high as 10-36%. A hefty $1,000 purchase could cost you upwards of $1,300+ after payments and interest. Gross.

Depending on the size and length of the loan, some are interest-free, while others aren’t. And if you have a longer loan with interest and miss a payment, that rate will skyrocket. It’s a lose-lose unless you’re on time for every single payment.

Sure, these can be helpful tools if you’re great with finances, saving up for big purchases, and sticking to a budget. Then again, if you handle your finances with care, you probably don’t need BNPL services in the first place.

Not to say that everyone who uses BNPL can’t afford the things they’re trying to buy, but it caters to that segment of shoppers. Short-term buying power to get the things you want. It’s the TikTok of shopping, with impulse buys and instant gratification.

Other Risks

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Along with convenience fees, potential late charges, and interest rates going through the roof if you miss a payment, other risks are associated with these services.

For one, most of them don’t allow you to choose the payment date or reschedule a payment if needed. That could instantly cause users to scramble to find funds or end up late. And considering BNPL services aren’t regulated, you don’t get the same protections as a credit card. Things like lost shipments, return policies, fraud, or damaged and defective goods.

Buy Now Pay Later plans don’t leave wiggle room for other events life might throw your way, either. Think about unexpected expenses, sick days that cause you to make less on a paycheck, or car trouble that will have you spread thin. You can’t reschedule a payment and will be out of luck. And in those situations, most of these services don’t even have a customer support phone number for you to call.

Those are just a few of the many potential risks you’ll face with BNPL, and that’s before mentioning that you’ll be spending money you don’t have to begin with.

Should You Use BNPL Loans?

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While we can’t say what you should or shouldn’t do or what’s best for your situation, it’s a good idea to avoid BNPL short-term loans.

Yes, BNPL can be great for a quick 3-4 payment session, but spreading out a purchase for an extended period, especially something expensive you don’t necessarily need, isn’t the best decision. Plus, according to ConsumerAffairs, a third of Americans using BNPL have missed a payment or are behind. Danger!

To make matters worse, when you combine buy now pay later services with all those “get paid today” apps where you get paid daily instead of every two weeks, you’re asking for trouble. That’s because you’re spending your money the minute you have it (or even if you don’t) and making big purchases, then having to pay them off later. It doesn’t leave wiggle room for unexpected expenses, fees, interest, or anything else life throws your way.

At the end of the day, avoid these services. If you must use one, you’ll want to carefully consider what you’re buying, how long the loan is good for, and how long you could be in debt. And always pay attention to interest rates or late payment info. Take all of that into consideration before your next impulse buy.


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