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In Your Debt: It’s Not Bad To Buy Now And Pay Later — But Beware | Lifestyle

Those cheesy TV infomercials that promise “three easy payments for $ 19.99” were well ahead of their time. Calling toll-free numbers to buy items that can be seen on TV is no longer fashionable, but the booming market makes installment ideas still popular. Buy now and pay for service later..

Companies like Affirm and Klarna, and credit card issuers like Chase and Citi, have different ways to split the cost of large purchases. Of course, there are rules and restrictions. Some BNPL services are affiliated with certain merchants, but credit card companies must carry one of their cards to participate.

But restrictions do not stop it from becoming a trend. In June 2021, Competiscan, a company that tracks and analyzes direct marketing activities, Pointed out that BNPL email marketing campaigns increased by 530% Over the past year, 28% of retail emails have mentioned BNPL in the first quarter of 2021.

However, BNPL is still a form of debt. If you hate debt and want to save for large purchases and pay them in full, it’s certainly a good tactic. But debt is not evil in nature. It’s just a financial tool that can make large purchases more manageable. Like any financial tool, it’s all about how you use it. There are several ways to use BNPL with caution.

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Andrew Gold, financial adviser to Prestige Wealth Management in Southlake, Texas, used BNPL services to finance large-scale purchases such as travel bookings, business purchases, and new mattresses. As a person who frequently discusses spending with clients, he recommends considering BNPL when he can afford to pay the full amount, but installments can help improve cash flow management. Before choosing a payment plan, check what you have in your bank account and how much money you will make each month. Then you will find that you can afford to pay with other obligations.

“This isn’t for those who are complaining about lack of money or who are constantly borrowing money from people,” he says. “This is for people who have a certain income and are looking for ways to take advantage of some of the benefits and conveniences of splitting their purchases over several weeks.”

Yes, you can gush for a nice shampoo and split your purchase into four $ 6 payments, but just because you can do that you should. It doesn’t mean. While the BNPL service is useful, it’s also too easy to shop impulsively when you’re on a tight budget. “We are in a world of immediate satisfaction,” says Gold. “There is a lot of luxury and excess in everyone’s life.”

Please check the fine print before purchasing

Before making a large purchase, find out how you can refund if you return the item, if it is lost in transit, or if it arrives damaged. What rights do you have if the merchant does not refund your money?

If the seller allows a refund, you can get the money back. For example, Affirm, Klarna, and Afterpay will give you a full refund, but Affirm states that if your plan includes interest payments, you will not be able to get the money back. If you need to challenge your claim because your item is lost or damaged, the first step is to contact the seller directly, just as you would with a credit card. In some cases, you may need to pay in installments, even if the seller gives you store credits instead of refunds.

Use BNPL to organize for very specific purposes, such as purchasing a series of events. Alexandria Broward used BNPL when she and her current husband decided they wanted to elope within a month.

In just a three-week weekend to find the dress and organize other logistics, Broward spent some money on his credit card and used BNPL on her clothes. She ordered several dresses, prepaid some of the costs, returned all but one, and regained money for their returns. Her tactic was to avoid spending all her money on credit cards. She also used BNPL to split the cost of $ 400 wedding shoes. “They really tied the dresses together,” she says. “If I had a daughter, she would get them.”

“Given that everything was on the edge, it was a great solution and service in my situation,” says Broward.

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This column was provided to The Associated Press by the personal finance website Nerd Wallet. Sara Rathner is a writer for Nerd Wallet. Email: srathner@nerdwallet.com.. Twitter: @SaraKRathner.

NerdWallet: What does it mean to buy now and pay later? https://bit.ly/nerdwallet-bnpl

Competiscan: Buy Now, Tend to Pay Later https://www.competiscan.com/2021/06/10/trends-in-buy-now-pay-later/

Copyright 2021 AP communication. all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.

In Your Debt: It’s Not Bad To Buy Now And Pay Later — But Beware | Lifestyle

Source link In Your Debt: It’s Not Bad To Buy Now And Pay Later — But Beware | Lifestyle

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