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- Buy now, pay later (BNPL) offers let consumers spread out the payments for their purchases over a set period of time, sometimes with no interest.
- Some BNPL options charge a set plan fee instead of interest, although these fees and the way they’re calculated can vary widely.
- Instead of BNPL options, consumers can also consider 0 percent APR credit cards to pay down large purchases over time.
If you’ve noticed more “buy now, pay later” options available when shopping for purchases online, you’re definitely not imagining it. The fact is, more and more companies have moved into the buy now, pay later (BNPL) space over the last few years, including major credit card issuers and third-party financial firms. Ultimately, this has led to more consumers financing their spending over several months or longer, with or without a credit card to help.
That said, there are definitely some pros and cons that come with buy now, pay later (BNPL) options when you compare using a line of credit for spending the way you normally would. Read on to find out which buy now, pay later options are out there, how they work and what to consider before you take advantage.
What is “buy now, pay later?”
- The estimated value of the global buy now pay later market grew to $129.7 billion in 2022. This market is expected to increase at a CAGR of 49.7 percent through 2030. (xResearch)
- The average consumer using BNPL owed $883 on their purchases at the time of the study. (C+R Research)
- The number of BNPL users will likely surpass 900 million worldwide by 2027. (Juniper Research)
- BNPL users are considerably more likely to be using credit cards, payday loans and other high-interest loans for their purchases. (Consumer Financial Protection Bureau)
- 67 percent of consumers think BNPL options help them stick to a budget and avoid overspending. (Mastercard)
Buy now, pay later (BNPL) is exactly what it sounds like. Rather than paying for the entire cost of an item upon purchasing it, you pay for it in monthly installments. Some credit card issuers offer their own BNPL services, though there are also independent BNPL companies.
The structure of BNPL programs can vary by quite a bit. Usually, the plan is interest-free for a standard timeline of four installments; thereafter, customers have to pay interest. However, there are sometimes fees for late payments, or payment plans that extend significantly longer.
“With buy now, pay later, customers are much more responsive to making payments because, in their mind, they’re tying the payment to whatever it is that they bought. However, when they buy that exact same thing with a credit card, emotionally, they’re not paying for that item—they’re paying their credit card,” said Rhett Roberts, CEO of LoanPro, a loan software company that has studied consumers’ emotional connection to BNPL services versus credit card payments.
For the most part, BNPL payment options are intended for people who want to spread out the financial cost of their purchases for a specific length of time. This can make financing items feel more “predictable” since monthly payments are typically fixed for the term of the BNPL agreement.
’If you’re looking to delay payment by a month or two, you put it on your credit card, but people who are looking for buy now, pay later services are looking for extensions beyond that.’— Marwan Forzley, CEO of Veem
Credit card installment plans
With the rise of independent BNPL companies, credit card issuers and brands are following suit with installment plans of their own. The chart below provides an overview of the major credit card issuer BNPL plans available right now, as well as their minimum purchase requirements for these plans to apply.
|Credit card features that function like buy now, pay later||Minimum purchase amount|
|American Express Plan It||$100|
|Citi Flex Pay||$500|
|My Chase Plan||$100|
|U.S. Bank ExtendPay||$100|
|Barclays Easy Pay||Varies|
|Apple Card monthly installments||Not disclosed|
American Express Plan It
Plan It is a program from American Express that allows you to choose up to 10 qualifying credit card purchases of over $100 that you can break up into monthly installments.
You’ll be shown three different term options that include the monthly payment, how many months you have to pay it off and any associated monthly fee based on the size of the purchase and your credit history. You also have the option to roll all ten purchases into one separate balance and pay that in installments as well.
Plan It is bundled with another program from American Express, Pay It, which offers the ability to pay off small purchases of under $100 throughout the month, reducing your total balance. Note that some purchases are not eligible for Plan It, including those with foreign transaction fees.
Citi Flex Pay
Like American Express, Citi also offers an installment plan service called Flex Pay. Qualified Citi cardholders can either choose an eligible item they’ve already purchased or select Flex Pay when using their Citi credit card at checkout on Amazon. The terms of each plan offered, including duration, minimum payment and separate interest rate charged are disclosed when you select Flex Pay.
My Chase Plan
My Chase Plan is another buy now, pay later (BNPL) option that’s offered exclusively on Chase credit cards. This plan lets you pay off larger purchases of $100 or more over a fixed payment term with no interest and only a fixed plan fee.
Chase customers who use My Chase Plan to pay down purchases will still earn rewards for their spending, and they can start a plan within their online account any time they make an eligible purchase.
U.S. Bank ExtendPay
Like many of the other BNPL options available through credit cards, U.S. Bank ExtendPay lets users pay down purchases of $100 or more with fixed monthly payments and no interest for a set repayment period. Instead of interest, U.S. Bank ExtendPay charges a small, fixed plan fee.
U.S. Bank ExtendPay doesn’t have an application process, and it can be applied to purchases made with a U.S. bank credit card after the fact. Payment plans can be for three months to 24 months.
Barclays Easy Pay
Barclays also offers a BNPL option on its credit cards known as Easy Pay. This promotion can apply to a range of purchases as determined by Barclays, although they don’t disclose their payment plans, minimum purchase requirements or other details online. Instead, they say that “details of the APR and the promotional repayment terms for any available Easy Pay Offer will be described in the specific offer.”
Unlike other BNPL options, however, Barclays does charge interest on purchases in their Easy Pay Plans. In fact, the bank says payments in these plans are calculated by adding up the promotional purchase balance and the projected amount of interest that would be charged over the payment term, then dividing that amount by the number of months in the plan.
Visa Installments is a Visa plugin available at checkout at select participating online retailers that allows you to pay for purchases in equal monthly installments. If the retailer is offering it — and it’s available on your card — you can select your plan at checkout before completing your purchase.
Currently, Visa only lists three retailers that are participating: The Room Place, 42nd St. Photo and Tire Agent. Just one credit card issuer (Commerce Bank) is offering Visa Installments on its cards.
Not to be outdone, Visa’s biggest competitor launched Mastercard Installments in 2022. Through this program, Mastercard issuers invite their customers to sign up with their existing cards. The terms of the payment plans offered (including the timeframe, payment amount and whether interest is charged) are set by the issuer and presented to the cardholder either at the payment terminal or at checkout.
Apple Card monthly installments
The Apple Card offers monthly installments when you use it to pay for Apple products at Apple.com, the Apple Store app or a physical Apple Store. The time frame can be as long as 24 months with no interest, and the selected plan can be viewed in your Apple Wallet. With Apple Card, your monthly installment payment becomes integrated into your minimum credit card payment.
Independent BNPL services
If you’re looking for a more flexible payment option than what’s offered by traditional credit cards, there are plenty of independent BNPL platforms out there. Generally speaking, these independent services partner directly with specific retailers, who in turn help facilitate their BNPL offers at the point of sale when you make a purchase.
The chart below shows the main types of BNPL offers you may be shown when you make a qualifying purchase, plus how their fees typically work.
|App||Cost||Google Play rating||App Store rating|
|Klarna||Up to four interest-free payments; Interest charged on payment plans up to 24 months||4.5||4.8|
|Affirm||Up to four interest-free payments; Interest charged on payment plans up to 12 months||4.7||4.9|
|Zip||Interest charged on monthly payments; installment fees of $0 to $7.50 can apply||3.8||4.9|
|Afterpay||Up to four interest-free payments; no fees when you pay on time||3.9||4.9|
|Pay in 4 and PayPal Credit||Up to four interest-free payments; interest charged on payment plans up to 24 months||4.7||4.2|
|PerPay||Plan costs vary||3.7||4.6|
Pros and cons of BNPL services
There are positive and negative aspects to paying for purchases in installments in a BNPL arrangement. For example, having the option to finance purchases can make it considerably easier to overspend. At the same time, BNPL options give consumers the option to spread out the “financial pain” of purchases they absolutely need to make.
With that in mind, the key to maximizing BNPL offers lies in making sure they are only accessed for items someone really needs to buy, and not just for splurges and unnecessary spending.
“It’s never a good idea to spread out purchases just because you can,” says budgeting expert Andrea Woroch.
“Don’t lose track of what you’re spending and don’t put yourself in a predicament of not being able to make your payments. However, if you are planning on making a big purchase you would like to use now, installment payments can be an alternative to saving money and will help you get what you need more immediately, but this should only be reserved for evaluated purchases.”
BNPL alternative: 0% APR credit cards
Another way to obtain an interest-free extended payment window is to use a credit card that offers a 0 percent introductory APR. The best zero-interest credit cards offer 18 months or longer before the regular interest rate kicks in. Plus, you can build credit and earn rewards for your purchases — a perk you won’t get with traditional BNPL services.
Here are a few of the best zero-interest credit card offers on the market right now:
- U.S. Bank Visa® Platinum Card*: 0 percent intro APR for 18 billing cycles on purchases and balance transfers, then 19.74 percent to 29.74 percent variable interest rate.
- Wells Fargo Reflect® Card: 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 18.24%, 24.74%, or 29.99% variable APR thereafter.
- Citi Custom Cash® Card*: 0 percent intro APR for 15 months on purchases and balance transfers, then 19.24 percent to 29.24 percent variable interest rate.
If you’re looking for an extended time period to pay for a purchase interest-free, a BNPL platform could work for your needs. This is especially true for singular, big-ticket items that you truly need right away and aren’t able to save up for over time.
Traditional credit cards are best for smaller, everyday purchases and anything else that you’re able to pay for outright. They’re also more beneficial in the long term because responsible use of credit cards can improve your credit score.
Be careful if you’re managing an installment balance while also having a credit card balance, as different interest rates and fees may apply.
*The information about the U.S. Bank Visa® Platinum Card and Citi Custom Cash® Card has been collected independently by Bankrate. The card details have not been reviewed or approved by the issuer.