New Survey shows more people relying on ‘Buy Now Pay Later’ payment plans

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Options like Klarna, After Pay, and Affirm have exploded in popularity, resulting in some retailers accepting them online and in-store.

“It was very helpful for me when I needed to get some new equipment. I could purchase the equipment I needed, but just pay in chunks,” Anthe Kelley, a shopper who used ‘buy now pay later’, said.

But financial experts like Ted Rossman, the Senior Industry Analyst at Bankrate, are warning that these options can add up quickly.

“You could also kind of trick yourself into thinking like, oh, it’s not a $200 purchase anymore. It’s just four easy payments of 50 bucks. And before you know, those have stacked up more than you realized,” Rossman said.

A survey by financial company Lending Tree found that 41% of users paid late in the last year. That’s up from 34% just a year ago.

“These payments are often due every two weeks, and if you have a bunch of plans running at the same time, you can forget. Setting up auto payments could actually be a nice fix there,” Rossman said.

The survey also found that more users are buying groceries with these plans, which is up to 25% from 14% just a year ago.

“I just worry that you’re going to need more groceries before that plan is paid off,” Rossman said. “So, not that anybody wants to be in debt, but I think some of this speaks to these challenges that a lot of households are facing.”

Financial experts say it’s best to make sure you budget these ‘buy now pay later’ options.

Missing a payment can lead to serious penalties, from additional interest to even a knock on your credit score.

Just like credit cards, buy now play later can be a good tool if used correctly.

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