NEW YORK (WABC) — You may be familiar with the acronym BNPL, which stands for Buy Now Pay Later. It’s a convenient and tempting option to help afford some of those more expensive purchases by breaking up payments into multiple, smaller transactions.<\/p>\n
However, instead of using BNPL for luxuries like pricey shoes or designer handbags, some consumers are now opting to use it for necessities, like food and rent.<\/p>\n
But some people are hesitant to use BNPL.<\/p>\n
“Normally if I buy something, it’s because I budgeted,” said Carol Elias, a consumer we spoke with in SoHo.<\/p>\n
Others use it to help with big purchases.<\/p>\n
“I like to pay in four installments when I go on a cruise or trip,” said Mandy Chol.<\/p>\n
But now, financial experts are seeing these budgeting trends take a turn.<\/p>\n
“We’re not just talking about big screen TVs and designer handbags. No, we’re talking about things like groceries,” said LendingTree’s Chief Consumer Finance Analyst, Matt Schultz.<\/p>\n
Schultz says BNPL has boomed, but this isn’t necessarily a good thing.<\/p>\n
“Buy now pay later is incredibly popular, but it’s also a sign of how many people are really struggling out here with costs,” Schultz said.<\/p>\n
The tool has become an emotional and financial crutch to ease the pain of big purchases.<\/p>\n
“These types of services like buy now pay later, like I said, they look very attractive because they offer, you know, at least a little bit of a band-aid between you know, what’s happening now and what’s happening in the future financially, right,” Schultz said.<\/p>\n
Dr. Erika Rasure is a Chief Financial Wellness Advisor with Beyond Finance. She says there are pros to BNPL.<\/p>\n
“Of course I do. I’m all about maximizing our cash flow, you know. And I think intention is key when using buy now pay later. And I do believe it should be used sparingly,” Rasure said.<\/p>\n
But there are also cons.<\/p>\n
“It’s very easy to start stacking buy now pay later payments all on top of each other. And then all of a sudden, you wake up one day, and you’re like, I can’t make any of these payments. And the interest consequences are, you know, even worse than what’s going on with my credit cards,” Dr. Rasure said.<\/p>\n
So before you feel backed into a corner where BNPL is your only option, Dr. Rasure’s biggest advice is to find clarity first and look at cutting costs before adding debt.<\/p>\n
“You can only make so much money, you can only stretch yourself so far. But it’s asking yourself, you know, where can I start to create some breathing room in my life,” Dr. Rasure said.<\/p>\n
When using BNPL, be cautious. Missed payments can mean late fees. Never link your credit card and limit the number of BNPL loans you have at one time.<\/p>\n
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