The Big Payback

Buy Now Pay Later (BNPL) services are truly making people pay. That’s according to a new report from Morning Consult, which found that BNPL can hurt people more than it helps.

The study found that BNPL users are mostly young — 37 percent of Gen Z adults and 32 percent of millennials said they have used these services at least once during the past year. Meanwhile, just 16 percent of Gen Xers and six percent of Boomers have used BNPL in the past year. BNPL users are also — alarmingly — more likely to have debt than the general public. About 55 percent of BNPL users have credit card debt, compared to just 38 percent of the general public. BNPL users also carry more auto loan debt, mortgage debt, medical debt and educational debt than the adult public. This is a big concern, because the report found that about 25 percent of BNPL users have missed a payment and 27 percent have paid hefty late fees.

While BNPL seems like a good offer — you make payments on the item over time and there is no interest charged — they can quickly bury you if you slip up. BNPL services carry large late payment fees and those can add up. Also, because BNPL loans aren’t reported to the credit bureaus, you can take out as many as you want, which can become overwhelming.

Before using BNPL, consider the consequences. If you can’t afford the item in total, saving until you can is a much better idea. The instant gratification that comes with BNPL makes them tempting, but in general, you are better off avoiding them.

Do One Thing: Start stashing away some dough — $20 – $100 per paycheck — for the items you’re putting on BNPL. Then, wait until you actually have the money to buy them.