5 common pitfalls of 'buy now, pay later' and how to avoid them this holiday season

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Learn how to manage tricky returns, confusing fee structures, credit reporting, overspending and multiple buy now, pay later plans at a time.

Shoppers filling their carts this holiday season will likely have the option to “buy now, pay later” at checkout.

““BNPL taps into this basic human instinct of wanting it now, but it’s just another way to separate people from their money.”” It may seem straightforward enough, but six weeks is a long time to pay off a holiday purchase, says Erik Nero, a certified financial planner based in Gansevoort, New York. This problem tends to get worse if you have multiple BNPL loans, which isn’t uncommon. A recent NerdWallet survey on BNPL found that 30% of Americans have used BNPL in the last 12 months. These BNPL users tapped the source of financing six times, on average.

Also see: CFPB chief says ‘buy now, pay later’ companies’ models are ‘dependent on digital surveillance’ Some lenders also charge fees for rescheduling a due date or reactivating your account after it’s been disabled from missing a payment. 4. Tricky returns Anyone who’s shopped for a distant relative knows how important it is to be able to make a return. But returns are tricky with BNPL because you’re actually dealing with two parties: the store you bought the merchandise from and the lender you used to pay for it.

 

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