If you've bought anything online in the last few years, you've probably noticed that little "buy now, pay later" button popping up in your shopping cart, giving you the chance to break up your purchase into easy payments over time. But sometimes, those "easy" payments can come at a cost.
To learn more, I talked to Shyam Pradheep about how these services work, and I also asked members of the BuzzFeed Community to share their buy now, pay later (BNPL) experiences and regrets.
Shyam Pradheep is the General Manager of the Gen Z-founded, gamified financial literacy app Zogo, which rewards users with gift cards for learning about responsible money management.
Shyam says that the BNPL services that have been showing up all over the internet are a new version of an old concept. "It's just another form of credit," he says, noting that credit cards have been popular in the US since the '50s and '60s.
Every BNPL service works a little bit differently, but Shyam says that people may choose them over credit cards in part because there are no interest charges associated with using these plans — though the late fees can be rather stiff. "Credit cards have had a lot of negative stigma associated with them, especially in the past couple of years. By removing interest fees, buy now pay later has done a good job of positioning themselves in a better light."
But in practice, using BNPL doesn't always go the way people planned.
Some people shared that using BNPL became a slippery slope that factored into their overspending.
"At one point in my 20s, I had so many outstanding buy now pay laters that it amounted to a few hundred dollars every time a payment was due. I felt like I could afford anything I wanted because it was 'only, like, $15 every two weeks!' But times that by 10 or 15, it was a lot."
Seeing their orders broken down into smaller payments made them feel like they weren't spending much cash at all.
"It’s so easy to get caught up in those payment forms. You see payments of $20 and think you can do that. Next thing you know, you owe $600 from various stores because the payments seem easy at the time."
—Sam, 32
"When all those 'pay later' purchases become 'pay now,' you definitely start to feel the regret! It adds up."
Some people even admitted to buying items that they otherwise might not have purchased.
"I ‘paid’ $100 for a western pastel shirt with an embroidered pelican on each breast. I thought I would look like a mix of Don Johnson and Steve Irwin. When I put it on and wore it out in public, everyone called me pelican boobs or the pervy birdy. For the next four months, I had a $25 reminder that I have a shirt in my closet that I can’t wear without being the laughing stock of wherever I’m at."
—Thom, 35
(For the record, Thom, I think your shirt sounds cool, and you should let your pervy birdy freak flag fly!)
And sadly, using BNPL can spiral out of control.
"I've used just about every one of the apps: Affirm, Zip, Klarna, AfterPay. Worst mistake, it was like a drug. I was buying things I'd never normally splurge on. I could've had tens of thousands dollars saved, but in the last two years, I've spent close to $20,000 using these apps. And once I couldn't keep up with the payments on one app, I used the next one, and it all just snowballed from there. I truly wish I had never used any of these."
—Deena, 36
When it comes to persuading people to overspend, Shyam thinks BNPL and the retailers who offer it may share in the blame. "I'm so curious," he says, "if it's buy now pay later or if it's the purchasing platforms themselves that are telling people, 'Hey, now that we have this partner, you should spend even more.'"
Another issue with BNPL plans that kinda surprised me was that some people reported experiencing computer glitches that made it really hard to just log in and make their payments.
"I used Klarna, and the first payment went okay. The second payment was not easy to make. I barely made it on time after a lot of hassle. I paid it off as soon as I could after the second payment, and I've never used it again. I felt like Klarna was trying to block me so they'd collect more. Never again."
—Kari, 64
And because they paid through BNPL, the retailer couldn't do much to help.
"I used BNPL for a vacuum cleaner that cost $289. After trying to make payments and the site not allowing me to make said payments, I went back to Sears who stated that it is not them. I continued to try to make payments, but the site would not allow me. Then, Sears went out of business. I finally started getting late notice emails that I could actually make the payment but late. It only took over $400 to pay it off, but at least it is off my credit report."
—Liz, 55
Some people even experienced getting charged for the same item multiple times.
"For some reason, Amazon's BNPL service could not get it together when I used it. They did the introductory charge so many times. Each time I contacted them on it, they said it would stop but it wouldn't, to the point where I was charged more than what the actual item I was buying cost. They said it was because they had to find the warehouse the item was stocked in, then would discover it wasn't there and had to relocate it. Um...that's fine, how is that my problem exactly? They did the introductory charge I think 10 times and had to cancel nine of them."
—Kelly, 37
Shyam says there are a couple of different reasons why BNPL plans might not work as smoothly as they appear to on their slick websites. For one thing, "Buy now, pay later is still new, and as a result, they have grown so fast to keep up with demand — and it seems that there is a lot of demand. That comes with consequences like technical glitches, being unable to maintain services, and things like that."
Plus, Shyam says that because BNPL plans aren't yet regulated in the same way as credit cards, companies aren't accountable to industry standards of service and care. "In general, anything that grows too fast without thoughtful growth or regulation is gonna have issues. This is a tale as old as time, and we have faced this in America a lot. This is just another case of it."
Finally, some people said that using BNPL backfired on them after unexpected events shook up their budgets.
"I made several purchases using BNPL. It worked out for the best...at first. But then, things started getting lean, and money became tight due to being off work following an on-the-job injury, and then, it turned sour on me. I was without an income for a while until my worker's comp benefits started. I struggled; I focused on my basic expenses and paid the rent and utilities, bought food and gas. My accounts have since been sent to collections, and I regularly get texts, phone calls, and emails about it...and there is nothing I can do about it, short of filing bankruptcy.
BNPL is NOT like a credit card. You can't make monthly payments or arrange to skip a payment or use payment protection or whatever. These companies will hound you until the end of time for their money.
It's just not worth it. It's really not."
—Shannon, 43
Shyam says BNPL plans can be especially tricky to manage when your financial situation changes. "It doesn't have those interest fees, and as a result, they do not offer the same level of flexibility as credit cards. And so with buy now pay later, so much of the onus is on us upfront in terms of not getting in this situation in the first place."
But on the flip side, some people shared that using BNPL has been overall really positive for them.
"Occasionally, I have found myself in a bind with buy now, pay later due to my own scattered brain. BUT as a single millennial mother who is just about to complete the National Debt Relief program, buy now, pay later has changed my life and my ability to purchase not only needs but also occasional desires here and there without credit cards. It’s amazing."
BNPL can really come in handy for a lot people, especially folks who don't have credit cards or who have lower credit scores because it's easier to qualify.
"I really like Afterpay and Klarna. I think that just like with credit cards, you just have to be careful with how you use them. If you tend to overspend or buy above your means, you're going to quickly run into trouble."
And people say they like how the payment schedules align with their paycheck schedules.
"I use Afterpay. It works for me because a big purchase is broken into four payments every two weeks, meaning I can afford those payments when I get paid."
If you're thinking about giving BNPL a try, Shyam has a few tips. "First, make sure that you really need it. And make sure that you're not doing a lot of them all at the same time." He suggests only using BNPL for really essential items, and keeping it to one payment plan at a time.
"Just like you keep track of rent, utilities, etc., you need to keep track and make a plan for how you need to pay this off. This includes if your financial situation changes. What is your plan B in case the money you thought you were going to use for this is no longer coming in."
