Issues with the "Buy Now Pay Later" option


I’ve noticed my daughter (who is 20) has been using Buy Now Pay Later a lot when shopping. Is this an OK way to buy things?

A: The Buy Now Pay Later (or BNPL) option that’s popping up in more and more stores is essentially the modern-day version of layaway. Instead of spending, say, $100 on a jacket, you can pay for it in regular installments. And, typically, there are no interest charges (but not always). This spending approach became quite popular during the height of the pandemic, especially with younger generations, and it’s a boon for retailers: Research shows that shoppers spend more per purchase when using BNPL (so don’t be surprised if you see it being aggressively promoted this holiday shopping season).

However, as great as it sounds (after all, no interest!), your daughter should be careful. BNPL does not require a hard credit check. So, she could qualify for a purchase even if, technically, she probably shouldn’t be approved – and this makes it very easy to start overspending. Plus, if she’s ever late making a payment, she will most likely be charged a late fee. You can see how this combination of factors could quickly spiral out of control.

The Simply Money Point is that your daughter needs to realize that BNPL is actually a loan. And if she can’t pay for something outright, she likely can’t afford it to begin with.


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