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How To Stay Out Of Trouble With Buy Now Pay Later


Buy now pay later (BNPL) entered the popular lexicon at around the same time as social distancing and Zoom fatigue, but it is not a new concept.  If you are old enough that you ever had to watch episodes of a comedy or drama series on television instead of bingeing it on Netflix or skipping past the commercials on YouTube, then you remember those noisy TV commercials that would always come on in May, right around the time that tax refunds would show up.  Car dealerships would urge consumers to buy a new vehicle with no money down and no accumulating interest (or perhaps even no payments due) for a year or more.  The message was simple: agree now to pay for our expensive product, and then worry later about whether you can afford to pay for it.  BNPL applies this premise to purchases great and small, allowing you to finance consumer goods ranging from clothing to groceries, and even Christmas gifts.  If you are planning to use BNPL for holiday purchases this year, a little bit of strategy goes a long way.  A Miami debt lawyer can help you chart a course to a financial situation where you will not need to use BNPL for your holiday purchases next year.

Pay in Full Instead of BNPL When Possible

If you have the choice of paying in full for one $200 present or buying five presents where the BNPL payments are $40 per month, choose the present you can afford to pay for in full.  There is no guarantee that you will be able to afford the payments for all five presents every time the payments come due.  Think of your holiday shopping budget in terms of the total cost of the items, not the cost of each installment.

Beware of Idiosyncratic Payment Schedules

BNPL repayment terms are not just like credit card payments.  Some BNPL arrangements have you pay in monthly installments, but for others, the payments are biweekly.  The late fees for missed payments can be very steep.  If possible, set up auto pay for your BNPL installment payments.

Beware of Deferred Interest

The fact that many BNPL purchases are interest free, at least for the first few months, is one of the reasons that they are such an attractive option.  It might seem like a win-win situation to pay as much as you can toward the price during the interest-free period and then pay interest on the remaining balance; you would pay much less than you would with a credit card that starts charging interest on your purchases almost immediately.  Unfortunately, some BNPL programs charge deferred interest.  This means that, if you have not paid off the purchase in its entirety by the time the interest-free period ends, you will be responsible for paying interest on the entire purchase amount.

Contact a Debt Lawyer About Avoiding an Accumulation of BNPL Debt

A South Florida debt lawyer can help you free yourself from the financial hardship caused by taking on too many BNPL purchases.  Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.



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