The New York Department of State’s Division of Consumer Protection shared tips to help New Yorkers manage Buy Now, Pay Later financing during the holiday season. This modality has gained popularity in recent years as a financial tool.
“Buy now, pay later” is a payment option that allows consumers to make purchases and defer payments over time, usually in installments, rather than paying the full amount up front. Today, consumers are financing electronics, furniture, travel, clothing, and even their grocery shopping, take-out lunches, or dinners through “Buy Now, Pay Later,” and many are falling behind on their payments.
“Don’t fall into the debt trap this holiday season. Buy Now Pay Later (BNPL) is increasingly common online, and consumers are using a variety of payment methods to make shopping easier, but before they know it, debt is mounting and harming their financial health,” said Secretary of State Walter T. Mosley.
“The Consumer Protection Division has important information and advice for those who use this payment method, to avoid falling into the financial traps that some of these abusive practices can lead to.”
While BNPL offers convenience, it carries significant risks, such as accumulating debt, encouraging impulse purchases, and increasing overspending. That is why it is important to use BNPL responsibly and avoid potential problems.
Keep these tips in mind to avoid a financial trap with BNPL:
– Read the payment terms:
Carefully review the terms and conditions, including payment schedules, interest rates and fees.
– Review your budget and plan your payments in advance to ensure you can meet the payment schedule:
If you have multiple payment plans, be sure to keep track of all of them and create a budget for each one. Get an accurate and complete view of your payment capacity.
– Monitor your accounts and make timely payments:
Keep track of all your BNPL accounts and payment schedules. Automate payments so you don’t miss any installments.
– Practice conscious purchasing:
Impulse purchases are an easy trap to fall into, so it is important to take care of your finances by being aware of them, creating a smart budget, avoiding excessive debt, and protecting your financial health.
– Understand how BNPL can affect your credit history:
Every BNPL lender is different, so review the terms carefully before purchasing and make sure it doesn’t affect your credit score. If the loan is not paid in full, it can have a negative impact on your credit history.
