4 Dangers of Buy Now, Pay Later (BNPL)
It’s hard to beat the convenience—but there’s also a downside.
Buy, Buy, Buy!
Today, four in five U.S. consumers are using buy now, pay later (BNPL) options to make purchases on everything from furniture and home goods to groceries and even takeout. These BNPL services, such as Afterpay or PayPal’s Pay Later loans, promise speed and flexibility—often boasting interest-free installments with no credit check required.
Sounds great, right? But before diving in, it’s important to understand how BNPL lenders operate—and what might be lurking behind those tempting payment plans.
1. It Can Be Confusing
While using BNPL may seem simple, things can get complicated—fast. For example, returns and cancellations don’t always go through the retailer; they often need to be handled through the BNPL lenders themselves. That means you could be stuck in limbo wondering: Do I call the store or the BNPL provider?
In the meantime, your automatic payments might continue—regardless of whether you’ve received your refund. This confusion can lead to missed deadlines, late payment fees, and potential harm to your financial health.
2. Your Credit Score May Be Affected
Pay later services may seem low-stakes now, but the credit industry is catching up. More consumer credit bureaus are beginning to track BNPL debt, meaning missed or late payments could negatively affect your credit history.
And unlike installment loans or personal loans, many BNPL services won’t help you build your credit through on-time payments—at least not yet. So even if you’re making timely payments, you might not be building the strong credit score you think you are.
And let’s not forget the risk of overdraft—if your linked account is low when an installment is due, you could get hit from both sides: a missed payment and a bank fee.
3. It Can Create Bad Spending Habits
With short-term, interest-free appeal and just a few clicks at checkout, it’s all too easy to start stacking up installment payments across multiple purchases. Unlike traditional credit products with revolving limits or structured personal finance tools, BNPL services often fly under the radar—making it harder to track how much you really owe.
While paying over time for a big-ticket item like a refrigerator might make sense, relying on pay later loans for things like clothes or coffee can quickly snowball into unmanageable BNPL debt. Just like credit cards, it’s still debt—and it still requires smart repayment discipline.
4. There’s Not as Much Oversight
Unlike the consumer credit protections that apply to lenders offering lines of credit, personal loans, or traditional installment loans, most BNPL lenders operate with much less regulation. That means fewer built-in safeguards for consumers and more variability in how payment plans are handled.
Miss a payment? You could face late fees, damage your credit score, and even hear from a debt collection agency. That “easy” checkout can turn into long-term financial consequences if you’re not careful.
Get the Facts Before You Click “Pay Later”
If you’re considering using BNPL, be sure you understand how the repayment terms, fees, and automatic payments will impact your personal finance goals. While interest-free sounds great, it doesn’t mean it’s free from consequences—especially if you run into missed payments or overextend your budget.
Blue is here to help you navigate your financial future—whether that’s with credit products, advice on payment plans, or building a solid credit history through responsible on-time payments. If you’re feeling overwhelmed by BNPL debt or want to explore safer options like a personal loan or line of credit, reach out.
We’re not here to judge—we’re here to help.
For more resources and tips, visit Blue University to explore our financial education library, including our latest course on Smart Credit.