Buy Now, Pay Later: Four Rules to Avoid Debt This Holiday

The "Buy Now, Pay Later" (BNPL) payment plan is surging in popularity for online holiday shopping. While it offers quick, often interest-free credit at checkout, financial experts warn it carries hidden risks similar to traditional debt. To use BNPL safely, follow these four essential tips: **1. Treat It Like a Real Loan.** A BNPL plan is a form of credit, not free money. Only use it for purchases you can afford to pay off completely by the final due date. Budget for the payments as you would any other essential bill. **2. Know the "Fine Print" Terms.** Understand all fees before you click "confirm." Key details include the number of payments, their due dates, and—critically—the late fee amount. Missing a payment can result in high penalties and hurt your credit score. **3. Limit Your Plans.** Avoid opening multiple BNPL agreements at once. Juggling several payment schedules across different retailers is a common path to overspending and missed deadlines. **4. Prioritize Your Essentials.** Never use BNPL for basic necessities like groceries or utilities. Using credit for these items can signal deeper budget problems. If you need credit for essentials, seek advice from a non-profit financial counselor. By following these rules, shoppers can leverage BNPL's convenience without falling into a debt trap during the holiday season.