What is Buy Now, Pay Later?

When buying a product online or in a store, you might be offered the option to ‘buy now, pay later.’ The question is, ‘What is it and how does it work?’

Buy now, pay later – or BNPL – lets you purchase a product by paying a certain percentage of the cost at checkout, then paying the rest in fixed amounts over a period of time, generally a few weeks or months. Those payments can be linked to your debit card, an account at your financial institution, or possibly your credit card.

Advantages of BNPL include quick approval and interest-free repayment periods.

But there can be drawbacks if you don’t hold up your end of the agreement. They can include late fees for missed payments, and significant interest rates that kick in if you don’t pay off your bill in the agreed-upon time period.

If you can make your payments on time and in full, a buy now, pay later option can be a great way make a purchase on a tight budget.