Buy Now, Pay Later (BNPL) – Pros, Cons, and Tips

Buy Now, Pay Later services like Afterpay, Klarna, Affirm, and Sezzle have exploded in popularity, especially among Gen Z. In fact, 24% of Gen Z shoppers use BNPL specifically to avoid carrying credit card balances. But is it actually better than a credit card? Let's break it down.

What Is BNPL?

BNPL splits a purchase into smaller installments, usually 4 payments over 6-8 weeks. Here's a typical example:

$200 purchase:

• Pay $50 today
• Pay $50 in 2 weeks
• Pay $50 in 4 weeks
• Pay $50 in 6 weeks

No interest if you pay on time. Miss a payment? Fees can add up fast.

Popular BNPL Services

Afterpay

• Split into 4 payments, every 2 weeks
• $8 late fee per missed payment (max $68)
• No hard credit check
• Purchase limit: $2,000

Klarna

• 4 interest-free payments OR longer plans with interest
• No late fees on 4-payment plan (but service freezes until you pay)
• Soft credit check only
• Purchase limit varies

Affirm

• 4 payments OR 3-36 month loans
• 0% APR on some purchases, 10-30% on others
• Does a soft credit pull
• Reports to credit bureaus (can help or hurt credit)

Sezzle

• 4 payments over 6 weeks
• $10 late fee per missed payment
• No hard credit check
• Purchase limit: $2,500

The Appeal: Why Gen Z Loves BNPL

No Credit Card Needed

Don't have a credit card or worried about getting approved? BNPL accepts almost anyone.

"Feels" Like Less Money

$200 feels expensive. $50 every two weeks feels manageable. This psychological trick makes buying easier – for better or worse.

No Interest (Usually)

Unlike credit cards at 20% APR, BNPL is 0% if you pay on time.

Fast Approval

Instant decision, no lengthy application, start shopping in seconds.

The Dark Side: BNPL Risks

It's Still Debt

Those 4 payments aren't suggestions – they're obligations. Miss them and you face:

• Late fees ($5-10+ per missed payment)
• Account freezes
• Collections agencies
• Damage to credit score (Affirm reports to bureaus)

Easy to Overcommit

Having 5 different BNPL plans across different stores is common. Suddenly you have:

• $50 due to Afterpay Monday
• $40 due to Klarna Wednesday
• $30 due to Affirm next week
• $60 due to Sezzle in 2 weeks

That's $180 in payments this month from what felt like small purchases!

Encourages Overspending

Studies show people spend 20-30% more when using BNPL because:

• It doesn't feel like "real" money
• The pain of payment is delayed
• You're focused on the installment, not the total

No Credit Building (Usually)

Most BNPL services don't report on-time payments to credit bureaus. So you're taking on debt without building credit. The worst of both worlds.

Exception: Affirm reports to Experian, so it can help build credit if you pay on time (but also hurts it if you don't).

Hidden in Your Budget

Unlike a credit card statement that shows everything you owe, BNPL payments are scattered across different apps and stores. Easy to forget one and get hit with fees.

BNPL vs. Credit Cards

	BNPL	Credit Card
Credit check	Soft or none	Hard pull
Interest	0% if on time	0% if paid in full, 15-25% if not
Builds credit	Usually no	Yes
Late fees	$5-10 per payment	$30-40 total
Fraud protection	Varies	Excellent
Rewards	None	1-5% cash back

The verdict: Credit cards are better IF you pay in full. BNPL is better IF you can't get a credit card or don't trust yourself to pay it off.

When BNPL Makes Sense

✅ Use BNPL When:

You can't get a credit card (no credit, poor credit, under 18)

You have a specific, planned purchase and the payments fit your budget

The alternative is a credit card you'd carry a balance on (0% BNPL beats 20% APR)

You need emergency purchase (broke your laptop, need it for work/school)

The store offers BNPL but not regular payment plans

When to Avoid BNPL

❌ Avoid BNPL When:

You already have 2+ active BNPL plans (too many to track)

You're impulse shopping (if you didn't plan to buy it, BNPL makes it too easy)

You could pay with a rewards credit card you'd pay off in full (miss out on cash back)

The purchase isn't essential (wants can wait until you have the full amount)

Your income is unstable (those payments are coming whether you work this week or not)

How to Use BNPL Responsibly

Rule 1: Treat It Like Cash

Ask yourself: "Would I buy this if I had to pay the full amount today?" If no, don't use BNPL.

Rule 2: One at a Time

Don't have more than 1-2 active BNPL plans. Pay one off before starting another.

Rule 3: Calendar Reminders

The day you use BNPL, add all 4 payment dates to your phone calendar with alerts.

Rule 4: Money Must Exist

Before buying with BNPL, make sure you have the money for at least the next 2 payments in your account.

Rule 5: Set Up Autopay

Link your debit card and enable auto-payments to never miss a date.

Rule 6: Track in Your Budget

Create a "BNPL Payments" line item in your budget and update it whenever you add a new plan.

What Happens If You Can't Pay?

Let's say you miss an Afterpay payment on a $200 purchase:

Week 1: Miss $50 payment → $8 late fee
Week 2: Miss another → $8 late fee
Total: Now you owe $216 instead of $200

Continue missing payments:

• Account gets frozen
• Can't use BNPL at that merchant anymore
• May get sent to collections
• Dings your credit if the service reports

What to do: Contact customer service IMMEDIATELY. Many services will:

• Waive first-time late fees
• Set up a payment plan
• Pause payments briefly

Don't ghost them. It makes everything worse.

BNPL and Your Credit Score

Most BNPL services (Afterpay, Klarna, Sezzle):

• Don't do hard credit checks
• Don't report payments to credit bureaus
• Don't directly affect your credit score

Affirm:

• Does a soft pull for approval (doesn't hurt score)
• Reports to Experian
• On-time payments help score
• Late payments hurt score

All BNPL:

• Can hurt credit if sent to collections for non-payment
• Can hurt credit if too many soft pulls in short time

The Smart Alternative: Credit Cards

If you have good spending discipline, credit cards beat BNPL:

Credit card you pay in full:

• 0% interest ✓
• Builds credit ✓
• Earns rewards ✓
• Better fraud protection ✓
• One monthly payment vs. multiple ✓

BNPL:

• 0% interest ✓
• Doesn't build credit ✗
• No rewards ✗
• Fraud protection varies ✗
• Multiple payment dates ✗

But if you're worried you'd carry a credit card balance (and pay 20% interest), then 0% BNPL is better.

Your BNPL Strategy

If you're going to use BNPL:

1. Choose one service and stick with it (easier to track)
2. Set a personal limit ($500 total in BNPL at any time)
3. Use for essentials only (not impulse buys)
4. Set up autopay immediately
5. Track payments in your budgeting app
6. Graduate to a credit card once you're comfortable with credit

The Bottom Line

BNP is a tool – not good or bad, but powerful and easy to misuse.

It's better than:

• Credit card debt at 20% APR
• Payday loans (at 400% APR!)
• Not being able to afford something essential

It's worse than:

• Paying cash
• Using a credit card you'd pay in full
• Saving up and buying later

24% of Gen Z use BNPL to avoid credit card debt, which shows good instinct. But the best solution is learning to use credit cards responsibly – you get all the benefits (rewards, credit building, fraud protection) with none of the interest if you pay in full.

Until you're ready for that, BNPL can be a useful stepping stone. Just don't let those easy installments trick you into buying things you wouldn't otherwise afford.

Four payments of $50 is still $200. Make sure it's $200 you actually have.