'Buy Now Pay Later': What's All the Fuss About?

Posted in Payments By Chanel Rick - Feb 3,2022
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With the soaring costs of groceries and unpredictable nature of the stock markets, any sudden expense could easily topple your monthly budget. Or worse, eat into your hard-earned savings. With the threat of these unpredictable expenses looming over us, it’s time to finally explore the option of “Buy Now, Pay Later”.

Often seen on promotional content that tout the benefits of this program, from saving you from making large payments to avoiding high interests on purchases. This payment option quickly rose to popularity with the increase of online shoppers.

Here’s How It Works

Bear in mind that every company that offers the “Buy Now, Pay Later” program, operates with its own set of terms and conditions, but here’s how they generally operate.

  • At a participating retailer, during the time of payment, you choose the “Buy Now, Pay Later” option.
  • Once approved, you make pay a certain percentage of the overall purchase amount upfront.
  • Over time, you will pay off the rest of the amount in (often) interest free installments.
  • These payments can be made via cheque or bank transfer; additionally, you can opt to pay through your debit card or credit card automatically.

Now that you understand the way this program works; you may have noticed that it’s a form of credit based purchase. The “Buy Now, Pay Later” option has a fixed repayment schedule, and usually with no additional interest or fees. Unlike credit cards, which require you to pay a minimum amount due on the card every month, with a high rate of interest.

But, Wait, What’s the Catch?

For most of it, not much! This mode of payment allows buyers to pay for purchases over a period with no added interest. In fact, adding to its many benefits, it’s also possible to avail this program, even if you suffer from a low credit score. Why? Because they’re not associated with any credit card debt, rather they add to your personal loan debt instead.

But, unlike with a credit card, you may miss out on certain benefits and rewards like cash-back. Also, if you ever were to return an item purchased through this program, things could get a little complicated. While you will get your money back, there could be possible delays until the retailer or merchant informs the “Buy Now, Pay Later” lender about the refund/return.

In the meantime, you are still required to keep up your part and make the payments until the matter is solved, or risk the payment being marked missing. So, in order to enjoy the benefits of this program, make sure you stay on top of your payments!

In the End, Is It Worth It?

If you have been struck with sudden expenses like a broken refrigerator or have relocated to a new city and need to furnish your apartment, then this option is ideal for those situations. After all, the whole point of this option is to give yourself a little time to generate the necessary funds and still have the product you need immediately.

However, while the “Buy Now, Pay Later” may seem like a viable option when you’re on a low budget, you should consider all the aspects surrounding this mode of payment. It’s best to avoid burdening yourself with too many ongoing debts.

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