Shoppers gearing up for the 2023 holiday season won’t have to look hard for a convenient way to pay for all those presents.
“Buy now, pay later,” a type of payment plan that divides the total cost of your purchase into smaller installments, is offered at most major retailers, including Walmart, Target, and Amazon. It’s expected to fuel $17 billion in online holiday spending this year – up almost 17% from 2022 – according to forecast data from Adobe Analytics, an analytics and measurement tool from software company Adobe.
The short application, immediate approval decision, and no hard credit check can make buy now, pay later seem like a no-brainer financing option, but experts say it’s risky. Ask yourself these five questions before opting in.
1. DOES THIS PLAN CHARGE INTEREST?
While most shoppers will encounter zero-interest pay-in-four plans — which divide the cost of your purchase into four equal installments with the first due at checkout, and the remaining three due every two weeks — longer, interest-bearing payment plans are becoming more common.
These plans range from months to years and charge an annual percentage rate of up to 36%, depending on the provider.
You’ll want to avoid interest since
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