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Routing #: 281277364

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Hidden Costs of “Buy Now Pay Later”

In today’s world, instant gratification activates our pleasure centers. We want it all, and we want it now! In that sense, utilizing a “buy now pay later” option can be attractive. Many big retailers offer easy-to-use installment plans – making large purchases seem like a reasonable option.

The benefits of using a “buy now pay later” service might be tempting to those who struggle with credit card debt. However, there are hidden long-term costs associated with these services that people often overlook. In addition, borrowing from one lender to purchase another item is known as a ‘cross-collateralized loan.’

What Does “Buy Now Pay Later” Actually Mean?

“Buy now pay later” is a type of deferred billing agreement requiring the consumer to make a purchase first and then repay it over time. This can come in various forms – from layaway plans at department stores to online payment plans that offer six months to pay or several prolonged installments without interest.

When Should You Use “Buy Now Pay Later” Services?

Using a “buy now pay later” service is only advisable if you are trying to make a large purchase and need time to save up for it. If your credit score isn’t good or you have bad credit, using these installment plans can hurt your credit score if not paid back on time (since you are borrowing the money). It is also important to note that these types of delayed payment options can occasionally come at a hefty price – adding up to hundreds of dollars in extra interest.

If you have the cash, it is highly recommended that you pay for your purchase all at once! As a result of this, you’ll be able to pay off your entire account balance without accruing any late fees.

What Are the Hidden Costs Associated With “Buy Now Pay Later” Services?

The hidden costs associated with delayed payment plans often outweigh any benefits from this type of transaction. For one, an installment plan makes it difficult to save for other expenses and short-term goals. You can also quickly find yourself in debt by continuing to make these purchases and forgetting to put money in your bank account when the time comes to pay up. This can affect your credit score and cost you late fees.

Finally, certain individuals view the “buy now pay later” process as an easy way to get items that they otherwise could not afford. They make several purchases without much thought, forgetting that eventually, they will have to pay for it all.

You can only benefit from such a transaction if you keep up with your monthly payments and avoid defaulting on them.


Buying with “buy now, pay later” is not without its hidden costs. If you struggle to make ends meet and need some time to save up before making a large purchase, consider the resources available from your credit union. A personal loan or line of credit may be a better option for your situation.

For those who can afford upfront cash payments but prefer installment plans so they don’t have to worry about their monthly bills, make sure you review the hidden costs associated with delayed payment plans!




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