Breaking News
More () »

What to know if you’re using 'buy now, pay later' apps for holiday shopping

The National Retail Federation expects Saturday to be the biggest shopping day of the season.

TAMPA, Fla — More and more people are turning to buy now, pay later apps. 

These installment loans allow you to buy something right away with little or no initial payment, then pay off the balance in multiple payments over time – usually four or fewer. 

It might be tempting to use those apps to lessen the burden of buying holiday gifts.  

Paying less up-front might be easier in the short term — but, if you’re not careful, you may wind up paying more than you expected later.

The National Retail Federation expects Saturday to be the biggest shopping day of the season —  with 27 percent of those shoppers planning to shop only online and 46 percent planning to shop both online and in stores.  

And that’s where you’ll usually encounter these buy now, pay later loans — when you’re shopping online or using a mobile app. 

We caught up with Achieva Credit Union Outreach Manager Tasha Cohen-Glynn, who tells us she’s used buy now, pay later apps. 

“Sometimes, buy now, pay later makes you feel like you can afford it, and you may not be able to,” said Cohen-Glynn. 

She said these apps can be helpful for shoppers who plan and budget for those payments. 

“If you’re using that particular app for your holiday presents, figure out what you have to purchase, even the amount of money you want to spend – that makes a difference as well, right? Versus, oh, buy now, pay later, I don’t have to pay it until later, so I can spend a little bit more. Nope. Look at your finances. Look at your budget. Look at your list. Then shop. That’s the smart way,” said Cohen-Glynn. 

Most buy now, pay later loans don’t charge interest but that’s not the case for all of them, so make sure you read the agreement you’re getting into. 

“So, sometimes I think people think, oh, let’s use the buy now, pay later. It’s $100, I pay $25 a month for four months. But some of them actually have interest attached, so you won’t be just paying $25 a month, depending upon the interest rate, right? And some of them are not so cheap. You actually end up paying more for it,” said Cohen-Glynn. 

Plus, most of these apps charge late fees for missed payments.  

Another drawback: the Consumer Financial Protection Bureau found some of these apps harvest and sell your data.  

That agency also found buy now, pay later loans don’t have the same consumer protections that credit cards have —  like dispute protections if the product you buy is faulty or a scam. 

And make sure you read the loan’s return policy in case the item you bought just doesn’t work out. 

Before You Leave, Check This Out