What You Need to Know About Pay Later Services

Buy now, pay later service is rising in popularity. Read what SpotMe thinks of this new payment on the block here.

Is delaying your payment a good thing?

Did you know? Buy now, pay later has more younger fans today than credit cards do. As the name implies, buy now, pay later service lets you purchase items now – even when you don’t have enough money to buy it – and the repayment is usually split equally into four bi-weekly installments. Different providers have different rules, though – some might require 25% payment during the checkout, others might have shorter repayment periods.

Now, let’s check out the two sides of the coin.

Why buy now, pay later is loved by many
Signing up for buy now, pay later is as easy as signing up on a social media. They don’t even do background or credit score checking. It’s also easy to use. You can go to your favorite store, both online and offline, pick any item you like, and choose pay later at the checkout page or counter. It’s nothing different than your usual shopping spree, right?

Now let’s compare buy now, pay later to credit cards. Unlike the latter, pay later service doesn’t charge you interest for the bi-weekly installment. In case of late payments, the interest rate of a credit card can soar as high as 20%. Wow, that’s quite a lot. On the other hand, pay later only charges you $10 late fees. You can also automate the installment to your debit card, ensuring you don’t miss a payment. Hence, it can also help you manage your finance.

With all these advantages, it’s no wonder that many young people prefer buy now, pay later than credit cards. Now, it’s time to check out the not-so-fun side of this service.

Why it could be bad for your wallet’s health
The concept of buy now, pay later is basically not so different from credit cards, short term loans or any other kinds of loan – you’re paying with money you don’t have yet. The fact that it doesn’t require background and credit score checking might seem like a loan-dream come true in a glance, but it could actually lead to the inability to repay whatever amount of money you recklessly spent.

Another thing you need to keep in mind is that you can’t choose your payment date with buy now, pay later service. If you automate your payment to your debit or credit card and you don’t have sufficient balance on the due date, your bank could charge you with overdrawn fee. If your card is declined, you have 24 hours to pay your installment manually. But once your 24 hours is up, you’ll be charged with $10 late fee. Another $7 will also be charged if you still haven’t repaid within 7 days. So, missing one payment alone could drain up to $17 off your pocket, and not to mention that some providers charge administration fees.

Having too much debt is never a good sign, including on pay later service. While it has no direct effect on your credit score, personal loan lenders will still check your pay later history and take it into account when reviewing any loan request you make.

As much as it helps you purchase things you can’t afford yet, always use buy now, pay later service as wisely as possible. This is to avoid getting yourself in future trouble, as well as keeping yourself safe from impulsive shopping.

What’s your thought on buy now, pay later service? Share in comment below!

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