Buy Now Pay Later: Difference between revisions

(2 intermediate revisions by the same user not shown)

Line 5:

==Why it is a problem==

Much like credit cards, this provides consumers with a false mindset in which they start to spend more than they actually have. This is due to the first initial part of the payment being a fraction of the total cost. If the consumer is not keeping track of payment dates that are due (since each item being purchased may have separate agreements for when you have to pay), this can lead to a pile-on effect where the customer gets billed a bunch of late fees that they owe interest on because they were not able to pay the agreed upon amount. This can lead the consumer into financial ruin because they now owe the late fee (with interest if not paid immediately) plus the amount that was due. This increases the chances that the next payment owed will be late, leading the consumer into a debt cycle which can eventually lead to bankruptcy.

And even in an ideal scenario, when no interest or late fees are owed, the final price is still typically more expensive than the normal sale price. For example, a couch that sells for $300 could have a BNPL price of $30 a month. This might initially seem like a better deal, as you'll pay less money at a time, but the total cost of BNPL would be $360.

==Examples==

* [https://www.affirm.com/ '''Affirm'''] to pay for your groceries.

*[https://www.affirm.com/ '''Affirm'''] to pay for your groceries.

* [https://www.afterpay.com/ '''Afterpay'''] to pay for gas.

*[https://www.afterpay.com/ '''Afterpay'''] to pay for gas.

* [https://www.klarna.com/ '''Klarna'''] to pay for Doordash deliveries.

*[https://www.klarna.com/ '''Klarna'''] to pay for Doordash deliveries.

*[https://www.shopabunda.com/'''Abunda'''] to pay for clothes and household items.

==References==

@@ Line 5: / Line 5: @@
 ==Why it is a problem==
 Much like credit cards, this provides consumers with a false mindset in which they start to spend more than they actually have. This is due to the first initial part of the payment being a fraction of the total cost. If the consumer is not keeping track of payment dates that are due (since each item being purchased may have separate agreements for when you have to pay), this can lead to a pile-on effect where the customer gets billed a bunch of late fees that they owe interest on because they were not able to pay the agreed upon amount. This can lead the consumer into financial ruin because they now owe the late fee (with interest if not paid immediately) plus the amount that was due. This increases the chances that the next payment owed will be late, leading the consumer into a debt cycle which can eventually lead to bankruptcy.
+And even in an ideal scenario, when no interest or late fees are owed, the final price is still typically more expensive than the normal sale price. For example, a couch that sells for $300 could have a BNPL price of $30 a month. This might initially seem like a better deal, as you'll pay less money at a time, but the total cost of BNPL would be $360.
 ==Examples==
-* [https://www.affirm.com/ '''Affirm'''] to pay for your groceries.
+*[https://www.affirm.com/ '''Affirm'''] to pay for your groceries.
-* [https://www.afterpay.com/ '''Afterpay'''] to pay for gas.
+*[https://www.afterpay.com/ '''Afterpay'''] to pay for gas.
-* [https://www.klarna.com/ '''Klarna'''] to pay for Doordash deliveries.
+*[https://www.klarna.com/ '''Klarna'''] to pay for Doordash deliveries.
+*[https://www.shopabunda.com/'''Abunda'''] to pay for clothes and household items.
 ==References==