Buy now, pay later: 4 things a finance expert wants you to know

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Buy now, pay later plans are everywhere. They might seem convenient. But make sure to read the fine print.

Buy now, pay later” loans typically offer a simple, zero-interest payment structure that can make keeping up with installments easy and affordable for some borrowers. But unlike other types of financing, such as credit cards, these plans aren’t currently reported to the major credit bureaus. Retailers from Apple to Nike to Banana Republic are offering the delayed payment option. The plans have soared in popularity, especially among young people.

That means a piece of furniture or fashion item that costs $100 could become four payments of $25. It might be simpler or more convenient for a consumer than paying off a credit card down the line, Schlesinger addsA lot of the companies offer their service with caveats: If you miss a payment, there could be late fees and interest. Some of the companies charge high interest rates, particularly on larger purchases, when the customer pays late.

“And some of these apps actually do have a small upfront charge every time you use the plan,” Schlesinger says. “So it's not all unicorns and rainbows.”A lot of these companies are using your data, says Schlesinger.

 

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