The holiday season isn't cheap. First, it's the holiday shopping, but then it's the holiday bills. With rising rents and inflation impacting Arizonan's wallets, many are trying to save where they can.
'Buy Now, Pay Later' programs may sound appealing to shoppers.
Here's how the programs typically work:
- A consumer makes a purchase and agrees to pay off the total bill in installments over a certain period of time.
- The first payment is made at checkout with the others happening at a later date.
- Purchases are often interest-free.
The programs can help consumers by alleviating big upfront payments. But there is some financial risk.
'Buy Now, Pay Later' plans do not offer the type of federal protections that come with purchases made by a credit card. That means if an item is broken, lost, or stolen, you're likely on your own.
Also, watch out for hidden fees. Many programs are interest-free, but if you miss a payment, that can change and you may be charged a large percentage. A missed payment could also mean a hit to your credit score.
You'll also want to protect your personal data.
A report by the Consumer Financial Protection Bureau finds a large number of Buy Now, Pay Later terms and conditions include agreements to having personal information shared with third parties.
The best way to protect yourself is to do your research before signing.
Also, be honest about your financial situation before your installment bills come due.
TheU.S. Public Interest Research Group has more tips to help you avoid financial pitfalls on their website.
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