Tips to avoid ‘Buy Now, Pay Later’ pitfalls on Black Friday (or any other shopping day)

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WASHINGTON – If a predatory, high-interest credit card and an old-fashioned layaway plan had a child, it might look like “Buy Now, Pay Later” (BNPL).

If you are shopping on Black Friday (or any other day), there are things you should know about that Buy Now, Pay Later offer, including that it may be difficult to return anything you don’t want or that’s defective.

We have a list of helpful tips shoppers should know BEFORE you Buy Now, Pay Later.

Most major retailers offer BNPL these days, sometimes for purchases as little as $30. You can actually divide up $30 into four easy payments of $7.50 each. Just about everyone can afford $7.50 every two weeks, right?

With higher inflation and tighter budgets for many this holiday season, it’s likely that more consumers will consider Buy Now, Pay Later offers, many without fully understanding them.

It works like this:

  • You make a purchase and agree to pay off the bill in four installments over six weeks.

  • You make the first payment at checkout using a debit or credit card.

  • The remaining three payments will come every two weeks, whether you have the money in your checking account or available on your credit card or not. If it’s “or not,” be prepared for possible overdraft or overlimit fees of $30 or more.

There can be fees and/or interest, sometimes even if you make all of your payments on time. Best case scenario: You pay it off on time with no fees and don’t need to return the item.

Shoppers run into problems when there are terms and conditions they didn’t read or understand, or when they make several purchases using BNPL and haven’t budgeted to juggle all of the payments that are lined up like planes on an airport runway.

Then there are the consumer protections you’re forgoing by not paying with a credit card to begin with. And you need to hope the item isn’t defective or that the recipient of the gift doesn’t want to return or exchange it. You may not be able to get a refund or an exchange, no matter the reason.

See our tips guide for other information you should know BEFORE you Buy Now, Pay Later.

Read our report on Complaints to CFPB show need for action.