Buy Now, Pay Later: What's the Catch?

  • Financial Education
  • Credit
Jan 28, 2022
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Online shopping has become a preferred method for many consumers, and online shopping options continue to grow. Chances are, you’ve likely seen offers to buy now and pay later upon your online checkout, but what does that really mean and is it a good financial decision? A buy now pay later option is always, in its simplest terms, a loan. Think of a buy now pay later option as a credit card, without the card.

Before you decide to utilize this payment method, it is important to understand the pros and cons of buying now, and paying later. There are always terms and conditions you must agree to, and read carefully, before choosing this payment route. Most of the terms and conditions of these loans are similar to those of a credit card. Whether it is a necessary purchase, or an impulse buy on a great deal, your repayment must be taken into consideration. Read through the terms of the loan and ask yourself the following:


How long do you have to repay, and are the payments affordable?

It is imperative that you understand how the payments are going to fit into your budget. Be sure the term of the loan offers a comfortable payment and if not, explore other options.

Are there any fees or finance charges?

Late fees are the most often charged fee if the payment is returned or declined. Generally, as more time passes, late fees continue to stack and increase the minimum payment due for your next payment. Companies may charge a fee for paying the loan back before the agreed upon terms. While most offers are interest free, be sure to confirm whether or not interest accrues on your loan. While most buy now pay later options are interest free, this varies by merchant.

How can payments be made?

Many companies will require automatic payments from a credit card or a checking account.

When are the payments due?

A repayment plan is offered to you before your purchase is completed. Whether the payments are weekly, monthly, or otherwise, be sure the payments coordinate with your pay period. Confirm if the due date is fixed, or if you have the ability to choose the due date.


Most companies that offer this payment solution advertise it as the easiest and most flexible way to purchase your product. You must be vigilant that buying now and paying later will benefit you financially. Just because you are not required to make a payment that day does not mean you will be prepared for the payments when they are due. Missing payments not only assesses fees that increase your payoff amount, but missed payments may also be reported to the credit bureaus, affecting your credit score.

Before considering utilizing a service that allows later payments, always check to see if Dutch Point Credit Union has a more affordable solution!  Our account specialists and loan experts can help you assess your finances and provide you with tools to help you achieve your goals. Give us a call or text us at 860-563-2617, start a web chat, or visit one of our Wethersfield, Newington, Berlin, Bloomfield, West Hartford, Niantic, or Middletown, CT locations to get started.

At Dutch Point, it's all about you. We empower you to make financial decisions that are right for you. We pledge to help you meet and exceed your financial goals through all the stages of your life.