If you want to use these programs, be sure to follow these tips:
1. Play it safe.
Given the uncertainty of refunds and customer service, make sure your purchase is in stock before opting for an BNPL plan. And think twice about using one for a new or little-known retailer, or for services that could easily be canceled or changed, like airline flights or concert tickets, Bell says.
And before working with a BNPL provider, check the company’s reviews online. “It will give you an idea of how the company treats customers and handles complaints,” says Sandra Guile, director of communications at the International Association of Better Business Bureaus.
2. Watch your budget.
The idea of breaking up a payment into smaller chunks and pushing it into the future can be tempting. But that could easily cause you to break your budget.
So before you hit “buy now”, take a close look at your budget and income to determine how much money you have to cover your payments.
Once you understand your spending limits, be sure to stay on track, perhaps keeping a list of planned purchases. And reserve an account for these future payments.
“You want to make sure you really have the money set aside for those bills when they come due,” says Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling.
3. Know the loan rules.
BNPL programs can vary widely, with some providers charging fees and interest and others not. Since retailers may work with different lenders, you can easily end up with loans from multiple vendors, all with different terms and payment schedules.
This makes it all the more important to look carefully at different transactions and understand late fees and potential interest rates, as well as what could happen if you don’t make payments, such as reporting your outstanding debt to a credit bureau or to be referred to a collection agent.
Ultimately, you’ll have the best protection using a credit card for your purchases, as issuers are required to have a dispute process if you experience canceled orders or need a refund. With Buy Now, Pay Later programs, these rules do not apply.