BNPL (Buy Now, Pay Later)

Buy Now, Pay Later (BNPL) services like Afterpay, Klarna, Affirm, and PayPal Pay in 4 allow you to split purchases into smaller payments, typically without interest if paid on schedule. They've exploded in popularity, especially for online shopping.

How It Works: You buy a $200 item and choose BNPL at checkout. You pay:

• $50 today
• $50 in 2 weeks
• $50 in 4 weeks
• $50 in 6 weeks

The Catch:

• Late fees: $7-15 per missed payment, plus potential interest charges
• Credit impact: Some report to credit bureaus, others don't
• Spending temptation: Makes it psychologically easier to overspend
• Multiple payments: Juggling 3-4 BNPL payments can lead to missed payments

Popular Services:

Afterpay: 4 payments every 2 weeks, no interest, late fees up to 25% of purchase Klarna: 4 payments or longer financing options (up to 36 months with interest) Affirm: Transparent APR (0-36%), longer terms, reports to credit bureaus PayPal Pay in 4: 4 interest-free payments, integrated with PayPal checkout

Hidden Costs: While advertised as "interest-free," merchants pay 2-8% fees, which they may pass to consumers through higher prices. You're indirectly paying for the convenience.

When BNPL Makes Sense: ✅ Emergency purchase you need but can't pay for today ✅ You have irregular income but guaranteed upcoming paycheck ✅ Avoiding credit card interest (20%+ APR)

When to Avoid: ❌ Buying wants, not needs ❌ You're already juggling multiple BNPL payments ❌ You can't afford it even spread over 6 weeks ❌ You have available credit card space (fraud protection is better)

Bottom Line: BNPL isn't "free money"—it's just delayed payment. If you can't afford to pay cash today, question whether you should buy it at all.