Why Consumers Should be Cautious with Buy Now, Pay Later

Convenience comes with a cost

Andy Spears


Photo by Jacek Dylag on Unsplash

You know the products — Klarna, AfterPay, Sezzle, Affirm, even PayPal “Pay in 4.” They offer you the chance to buy what you need or want right now and pay for it over a short period of time, usually in four total payments.

This type of purchasing power boost can be especially helpful in a time of rising inflation. You get the product you want now at today’s price and manage the total purchase over time. It’s generally free, so it seems great.

Consumer groups, however, are warning that so-called “Buy Now, Pay Later” products actually come with a cost — and that cost can be high in terms of fees and even hits to your credit report.

One group that took a look at BNPL is the U.S. Public Interest Research Group (U.S. PIRG). They analyzed complaints to the Consumer Financial Protection Bureau to determine trends in the use of these products.

Here’s a quick distillation of the core findings:

Our findings, based on a review of complaints to the Consumer Financial Protection Bureau (CFPB) and the Better Business Bureau (BBB), show that hidden fees, interest and debt collection problems can harm consumers. We also find that consumers also face problems with customer service.

These claims are backed up by the results of a recent survey of BNPL customers:

The results of that survey point to reasons to be wary:

32% of Buy Now Pay Later plan users have had to skip paying an essential bill such as rent, utilities or child support in order to make their payments. Even after that, 30% report that they’ve struggled to make their payments.

Thankfully, PIRG and other consumer groups have warnings and some recommendations:

However, BNPL products do not underwrite for a consumer’s ability to repay, can rely on the expectation of late fees, can be difficult to manage, and can trigger…



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .