Want to buy now but pay later? Read this first

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Planning to buy things like new clothes or electronics for the holidays, but want to pay later? Some businesses offer “buy now, pay later” plans, which let you get your purchase right away and pay for it over a few weeks or months, sometimes without paying interest. Here’s what to know before you decide if a buy now, pay later plan is right for you now — and later.

Buy now, pay later plans might charge you low or no interest, and offer you a way to pay over time for goods and services. But that doesn’t mean the plans are risk-free. Many plans charge high late fees, per-transaction fees, or change fees, among others. Also, some plan providers may report your payment history to the three nationwide credit bureaus, so if you pay late or miss a payment, it could hurt your credit score.

Before you use a buy now, pay later plan to buy your holiday gifts, know what you’re getting:

• Know the costs. Are there interest charges or fees? Will the plan provider report your payments to the credit bureaus?
• Check the reviews. See what others have to say, especially about disputing charges or making returns.
• Understand the risks. What happens if you miss a payment?
• Prepare for a credit check. Some plan providers require a credit check before you use a plan.** **To check your credit, order your free credit report at AnnualCreditReport.com or call 877-322-8228.

If you have a bad experience with a business when you’re buying now and paying later, tell the FTC at ReportFraud.ftc.gov.

[Note: Updated on May 22, 2024 to reflect the CFPB’s new interpretive rule.]

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