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Is ‘Buy Now, Pay Later’ Right For You? Here’s What To Consider

Buy Now Pay Later

EVERYWHERE, THEY’RE POPULAR WITH MILLENNIALS AND GEN Z BUT WHAT TO CONSIDER NOW. >> YOU’RE BORROWING MONEY YOU DON’T HAVE FROM A COMPANY AND PAYING THEM BACK. >> WANT TO GET IT OVER WITH. >> Reporter: BUY NOW, PAY LATER, THE TREND THAT GIVES YOU MORE BUYING POWER BY BREAKING ONE BIG PURCHASE INTO FOUR SMALLER PAYMENTS EVERY TWO WEEKS. YOU GET A $100 SHIRT BUT ONLY PAY $25 NOW AND $25 EVERY TWO WEEKS UNTIL THE SHIRT IS PAID OFF.

BUT IT’S NOT JUST CLOTHING. WALMART RECENTLY ACCEPTING IT FOR GROCERIES AND TEXACO AND CHEVRON FOR GAS, ALLOWING USERS TO SPLIT UP PAYMENTS. buy now pay later ALLOWS YOU TO GET WHAT YOU WANT, BUT CRITICS SAY THE EASY SPENDING CAN LEND ITSELF TO RECKLESS SPENDING. >> IT’S EASIER TO SPLIT UP THE PRICES TO MAKE IT FEEL LIKE YOU ARE PAYING LESS BUT YOU WEREN’T. >> Reporter: 19-YEAR-OLD AVA IS A COLLEGE STUDENT WHO SAID SHE’S OVERSPENT AND MISSED PAYMENTS USING THESE LOANS.

>> I THINK IT DOES ENABLE ME TO SHOP A LOT MORE THAN I NORMALLY WOULD. >> Reporter: FOR OTHERS LIKE ERIKA WRIGHT A SINGLE MOTHER OF THREE, buy now pay later HAS HELPED HER GET GROCERIES IN BETWEEN PAYCHECKS. >> THEY’RE A LIFE SAFER, TO BE HONEST. WHEN YOU’RE ABLE TO USE THE APPS TO MAKE LARGE PURCHASES THAT YOU DON’T HAVE THE MONEY FOR, THESE APPS COME IN HANLEY. >> Reporter: LAST YEAR AMERICANS SPENT $20 BILLION WITH buy now pay later SERVICES.

HALF OF THEM SAID IT WAS THE ONLY WAY THEY COULD AFFORD THEIR PURCHASE. BUT A RECENT LENDING TREE SURVEY FOUND 42% OF USERS WERE LATE ON A PAYMENT, WHICH CAN HURT CREDIT SCORES. >> A SINGLE LATE PAYMENT ON YOUR CREDIT REPORT CAN TAKE 50 OR MORE POINTS OFF YOUR SCORE. >> HOW DO YOU AVOID GETTING IN TROUBLE? >> ONE THING TO KNOW IS YOURSELF AND YOUR CAPABILITY FOR MANAGING YOUR MONEY.

>> WE SEE IT AS A SAFEST WAY FOR PEOPLE TO USE CONSUMER DEBT.

>> Reporter: DAMIAN IS THE VICE PRESIDENT OF PUBLIC POLICY FOR AFTER PAY ONE OF THE LARGEST BUY NOW, PAY LATER COMPANIES. HE SAID UNLIKE CREDIT CARDS WHICH PROFIT FROM HIGH INTEREST AND REVOLING DEBT, AFTER PAY USERS GET CUT OFF AFTER ONE MISSED PAYMENT. >> YOU DROP THEM AS A CUSTOMER AND EAT THAT COST? >> THAT’S EFFECTIVELY CORRECT.

Is ‘Buy Now, Pay Later' Right For You? Here's What To Consider

WE PAUSE THE ACCOUNT AND WAIT FOR THE CUSTOMER TO COME GOOD ON THEIR PAYMENT BEFORE THEY’RE ALLOWED TO USE THEIR PURCHASES AGAIN. >> DO YOU THINK IT TEMPS PEOPLE TO BUY OR SPEND ON THINGS THEY DO NOT NEED OR SPEND MORE THAN THEY SHOULD? >> I CAN’T COMMENT ON WHETHER SOMEONE IS PURCHASING WHAT THEY NEED OR NOT.

WHAT WE SEE FROM OUR RETAILERS IS SOMEONE MAY HAVE GONE ONLINE DECIDED THEY WANTED TO BUY ON SHIRT AND SEE AFTERPAY IS AVAILABLE, THEY BUY THE JACKET AS WELL. >> THEY BUY MORE THAN THEY INTENDED TO.

>> THEY MAY PURCHASE EXTRA. >> Reporter: BEFORE TAKING OUT A LOAN, EXPERTS SAY KNOW THE PAYMENT SCHEDULE, SET UP TEXT AND EMAIL ALERTS TO REMIND YOU OF UPCOMING PAYMENTS. AND ONE MORE TIP. >> IF POSSIBLE, PAY UPFRONT. >> IF YOU AIN’T GOT IT, DON’T TRY TO SPEND IT.

>> VERY GOOD ADVICE. IT’S A BIT OF A WILD WEST WITH THESE LOANS. SOME REPORT YOUR LATE PAYMENTS, OTHERS DO NOT. AND LATE PAYMENT FEES ARE DIFFERENT FOR ALL OF THEM. AND APPLE IS PART OF THE GAME, IT’S PART OF WALLET, APPLE PAY LATER, ZERO INTEREST AND NO FEES OF ANY KIND.

WHEN APPLE GETS INTO IT, YOU KNOW IT’S A THING.

>> HOW DOES THE PROCESS TO GET THE LOANS, HOW DOES THAT AFFECT YOUR CREDIT OR DOES IT? >> ALL THE COMPANIES THAT WE TALKED TO SAY THEY RUN A SOFT CREDIT CHECK WHICH WON’T HURT YOUR CREDIT SCORE. BUT THIS IS KNEW TO THE CREDIT BUREAUS THEMSELVES, THEY’RE TRYING TO FIGURE OUT HOW DO THEY WAY THE APPLICATIONS, MISSED PAYMENTS, AND GOOD P.

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