Buy now, pay later is everywhere. Louisiana consumer experts warn it can come with costly risks

Buy now, pay later options have become a common sight at checkout, showing up everywhere from clothing and concert tickets to groceries and big-ticket electronics.The payment plans promise convenience, allowing shoppers to take home what they want immediately while spreading payments out over time. But consumer experts warn that the fine print matters and the cost can add up quickly.“It’s like having free money, a free product. You don’t have to spend any money right away,” said Michael Drummond with the Better Business Bureau.Buy now, pay later works like a short-term loan. Many plans split purchases into multiple payments and are often marketed as interest-free if payments are made on time.Drummond says that ease of use is part of the appeal, and part of the risk. The option has gone mainstream since the pandemic. Adobe Analytics reports that more than 20 billion dollars in online holiday purchases were financed through buy now, pay later in a single year.Drummond says the decision often feels painless in the moment, but the responsibility falls on the consumer later.“If it’s too good to be true, it always is,” he said.As buy now, pay later has grown, consumer protections have not fully caught up. The Consumer Financial Protection Bureau moved to regulate buy now, pay later plans more like credit cards, but later pulled back on enforcement, leaving inconsistent protections depending on the company and the plan.Experts say it is important to understand the difference between short pay in four plans and longer-term financing options. “They’re essentially fronting you the money ahead of time, and that’s where it gets very sticky,” Drummond said.If a shopper misses even one payment, late fees can be added and interest can continue to build. Depending on the company, missed payments may also lead to frozen accounts, collection efforts, or credit reporting.Federal Reserve research shows buy now, pay later is often used by people with limited savings or limited access to traditional credit, many of whom say it is the only way they can afford certain purchases.That makes buy now, pay later both a tool and a potential trap, especially for people already living paycheck to paycheck.Drummond says consumers often end up paying more overall.“Absolutely. One hundred percent,” he said. “When you add in fees, interest, and rates, you’re going to pay more for that product at the end than if you paid for it upfront.”Even shoppers who never miss a payment should read the terms carefully.“They can still tack in some fees,” Drummond said. “That’s why reading the fine print is key, knowing what you’re actually paying for.”Consumer advocates also warn that buy now, pay later plans may not offer the same protections as traditional credit cards. Disputes over charges, refunds, or returns can be more complicated, and consumers may still be responsible for payments while disputes are reviewed.Another concern is the ability to stack multiple buy now, pay later plans at the same time. Because some plans do not initially appear on credit reports, consumers may take on multiple payment obligations without fully realizing how much they owe in total.Some buy now, pay later companies have begun reporting loans or missed payments to credit bureaus, while others still do not. Experts say that lack of consistency makes it harder for consumers to understand the long-term impact on their credit.Automatic withdrawals are another risk. Payments are often deducted automatically from bank accounts or debit cards, which can lead to overdraft fees if there is not enough money available when a payment is due.Consumer experts recommend treating buy now, pay later plans like any other form of borrowing. They advise only using them for purchases that fit comfortably within a household budget and reviewing the full payment schedule before agreeing to any plan.Drummond says slowing down before clicking yes can make a difference.“It looks like a good idea and people do it,” he said. “But reading the fine print really matters.”For more information on buy now, pay later programs and consumer protections, the Consumer Financial Protection Bureau offers guidance at consumerfinance.gov.The Better Business Bureau provides tips on understanding payment plans and avoiding common pitfalls at bbb.org.Consumer Reports offers detailed explainers on buy now, pay later services, including information about fees and credit impacts, at consumerreports.org.The Federal Reserve publishes research on consumer borrowing and payment trends at federalreserve.gov.

NEW ORLEANS —

Buy now, pay later options have become a common sight at checkout, showing up everywhere from clothing and concert tickets to groceries and big-ticket electronics.

The payment plans promise convenience, allowing shoppers to take home what they want immediately while spreading payments out over time. But consumer experts warn that the fine print matters and the cost can add up quickly.

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“It’s like having free money, a free product. You don’t have to spend any money right away,” said Michael Drummond with the Better Business Bureau.

Buy now, pay later works like a short-term loan. Many plans split purchases into multiple payments and are often marketed as interest-free if payments are made on time.

Drummond says that ease of use is part of the appeal, and part of the risk.

The option has gone mainstream since the pandemic. Adobe Analytics reports that more than 20 billion dollars in online holiday purchases were financed through buy now, pay later in a single year.

Drummond says the decision often feels painless in the moment, but the responsibility falls on the consumer later.

“If it’s too good to be true, it always is,” he said.

As buy now, pay later has grown, consumer protections have not fully caught up. The Consumer Financial Protection Bureau moved to regulate buy now, pay later plans more like credit cards, but later pulled back on enforcement, leaving inconsistent protections depending on the company and the plan.

Experts say it is important to understand the difference between short pay in four plans and longer-term financing options.

“They’re essentially fronting you the money ahead of time, and that’s where it gets very sticky,” Drummond said.

If a shopper misses even one payment, late fees can be added and interest can continue to build. Depending on the company, missed payments may also lead to frozen accounts, collection efforts, or credit reporting.

Federal Reserve research shows buy now, pay later is often used by people with limited savings or limited access to traditional credit, many of whom say it is the only way they can afford certain purchases.

That makes buy now, pay later both a tool and a potential trap, especially for people already living paycheck to paycheck.

Drummond says consumers often end up paying more overall.

“Absolutely. One hundred percent,” he said. “When you add in fees, interest, and rates, you’re going to pay more for that product at the end than if you paid for it upfront.”

Even shoppers who never miss a payment should read the terms carefully.

“They can still tack in some fees,” Drummond said. “That’s why reading the fine print is key, knowing what you’re actually paying for.”

Consumer advocates also warn that buy now, pay later plans may not offer the same protections as traditional credit cards. Disputes over charges, refunds, or returns can be more complicated, and consumers may still be responsible for payments while disputes are reviewed.

Another concern is the ability to stack multiple buy now, pay later plans at the same time. Because some plans do not initially appear on credit reports, consumers may take on multiple payment obligations without fully realizing how much they owe in total.

Some buy now, pay later companies have begun reporting loans or missed payments to credit bureaus, while others still do not. Experts say that lack of consistency makes it harder for consumers to understand the long-term impact on their credit.

Automatic withdrawals are another risk. Payments are often deducted automatically from bank accounts or debit cards, which can lead to overdraft fees if there is not enough money available when a payment is due.

Consumer experts recommend treating buy now, pay later plans like any other form of borrowing. They advise only using them for purchases that fit comfortably within a household budget and reviewing the full payment schedule before agreeing to any plan.

Drummond says slowing down before clicking yes can make a difference.

“It looks like a good idea and people do it,” he said. “But reading the fine print really matters.”

For more information on buy now, pay later programs and consumer protections, the Consumer Financial Protection Bureau offers guidance at consumerfinance.gov.

The Better Business Bureau provides tips on understanding payment plans and avoiding common pitfalls at bbb.org.

Consumer Reports offers detailed explainers on buy now, pay later services, including information about fees and credit impacts, at consumerreports.org.

The Federal Reserve publishes research on consumer borrowing and payment trends at federalreserve.gov.