Buy Now Pay Later Services – Everything You Need To Know

What you need to know about buy now, pay later services

Buy now, pay later services allow you to delay payments or pay in installments (usually monthly) over a specific period of time. Here, we will explain how these payment services work, what fees you’ll incur, and how to avoid financial trouble if you use these services.

  • What is buy now, pay later?
  • How do these services work?
  • Are buy now, pay later services worth it?
  • Managing your buy now, pay later payments
  • Making a complaint about buy now, pay later services


What is buy now pay later?

You may recognize some of these names in the buy now pay later service space:

  • Fingerhut
  • SkyMall
  • QVC
  • HSN

Buy now pay later services are offered by retailers and service providers so you can obtain a product immediately and delay the payments. You then pay off the product in the form of installments over several weeks, or possibly even a longer period of time.

Low-value purchases like clothes and beauty products aren’t the only items offering the buy now pay later strategy. You can even find solar panels and other home goods by using the by now pay later method.

How do these services work?

Buy now pay later services are offered when shopping online or in-store as an alternative payment option when checking out. You can apply for and set up a purchase plan through the provider’s app or website when you shop online.

If you’re shopping in-store, a store’s representative will usually perform the application process on your behalf. The provider will simply contact you when your application has been approved, and doesn’t take long.

You’ll likely need your bank and/or credit card information the first time you use the buy now pay later services so your payments can be deducted in the future. You might also be required to pay a deposit or the first installment at the beginning.


Refunds and returns

If you have an issue with the product or service you’ve bought, the shop or service provider’s return policy will apply, so it’s best to contact them first.

Are buy now pay later services worth it?

Buy now pay later services are often advertised as “interest free” or “0% interest,” but the cost will add up if you cannot make your payments on time.

Here are some things to watch out for before you use these services.

  • Late fees- every time you miss a payment or pay late, you’ll incur a late fee. These can add up significantly over time.
  • Monthly administrative fees- some of these account-keeping fees charge a fixed amount just to use the service.
  • Payment processing fees- you may be required to pay a fee for each payment, on top of your set payments.

Smart Tip - Always check the terms and conditions before you sign up, as they can differ between each buy now, pay later service.


Is your credit history or ability to repay checked?

Most buy now pay later providers do not check your ability to repay, or your credit history. This might put you in a position of taking on more credit than you can afford, getting yourself to a place of having trouble with repayments. This can affect your credit score, however, as some stores or online businesses report late payments to the credit bureaus.

Managing your buy now pay later payments

Stay in control when using a buy now pay later service by following these tips:

  • Plan in advance: Ensure you can afford the full price and that the payments fit into your budget. Consider all of your bills and financial commitments due at the same time as your buy now pay later payments.
  • Don’t get into debt: Consider linking your buy now pay later account to a debit card instead of a credit card. That way, you’re always paying with your own money and avoiding interest.
  • Don’t over commit: Stick to a limit and aim to only carry one buy now pay later purchase at a time.
  • Ask for help: If you’re struggling to make your payments, contact the company from which you made the purchase straight away.


Making a complaint about buy now pay later services

Most buy now pay later companies have dedicated complaints and hardship services. Contact your buy now pay later company if you have a complaint or find it difficult to make your payments.

Using buy now pay later when you shop can be a convenient way to pay for items, but you need to be careful not to overstretch your budget by making multiple purchases or buying more expensive items than you typically would.