Are “buy now, pay later” services too good to be true?

If you’ve been shopping online recently, you’ve probably noticed that many retailers – Sephora, Air Canada, and others – are partnering with a host of digital payment companies that offer the option of paying in installments.

These companies, including Afterpay, Klarna, and PayBright, allow you to buy now and pay later, often in four installments two weeks apart. The service is becoming so popular that banks are creating their own versions. What’s more, they promise not to pay fees; it is the retailer who pays them, not the buyer.

No fees, no interest, and that big makeup or nightwear order won’t hit your credit card all at once. Sounds great right?

Financial educator Jessica Moorhouse says it’s a slippery slope.

By the numbers


Respondents using Buy Now Pay Later services.

3. 4%

Users who have fallen behind in one or more payments.


Users who were late on payments who believe their credit score decreased as a result of late payments.

Results of an online survey of 1,044 Americans age 18 and older conducted by Qualtrics in August 2021.

Source: Credit Karma

If you plan to pay in installments, you need to be sure that you can actually afford those installments or you will be hit by the fees for the payment service, he said. Plus, you could incur fees from your bank, either from credit card interest or from overdrafts.

Paying in installments may seem like a good way to soften the financial hit, but it might actually convince you to add more to your cart than you would otherwise.

Moorhouse said buying now, paying for service later can be a good idea in an emergency – let’s say your phone or oven breaks down and needs to be replaced. But make sure you don’t sign up for something you can’t pay for later.

“If you don’t have the money (now), you can’t pay it.”

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