NEW YORK (HRNW) — Since the start of the pandemic, the option to “buy now, pay later” has skyrocketed in popularity, especially among young and low-income consumers who may not have ready access to traditional credit.
If you shop online for clothes or furniture, sneakersor concert tickets, you’ve seen the option at checkout to break the cost into smaller installments over time. Companies like Afterpay, Affirm, Klarna, and Paypal all offer the service, with Apple due to enter the market later this year.
But with economic instability rising, so are delinquencies. Here’s what you should know:
Branded as “interest-free loans,” buy now, pay later services require you to download an app, link a bank account or debit or credit card, and sign up to pay in weekly or monthly installments. Some companies, such as Klarna and Afterpay, do soft credit checks, which aren’t reported to credit bureaus, before approving borrowers. Most are approved in minutes. Scheduled payments are then automatically deducted from your account or charged to your card.
The services generally don’t charge you more than you would have paid up front, meaning there’s technically no interest, so long as you make the payments on time.
What to know about ‘buy now, pay later’
