Buzz
One of Amazon's biggest sales events is fast approaching, taking place on October 8 and 9. As you browse your Prime Day offers, think twice about choosing the ‘buy now, pay later’ (BNPL) option. While it may seem tempting to spread out payments with no interest, these plans come with serious drawbacks that make them less than ideal for Prime Day shopping sprees. Nearly 20% of BNPL users miss payments, and 30% end up spending more than planned, according to a Bankrate survey. Let’s explore why ‘buy now, pay later’ might not be the best way to handle your Prime Day purchases.
Hefty Late Fees
The main risk with buy now, pay later is the possibility of missing a payment. When you fail to pay on time, you can face a late fee of $7 or more from the lender. These fees can quickly accumulate if you miss several payments. That sweet Prime Day deal may lose its appeal once the expensive late fees start adding up.
Surprise charges for interest
Buy now, pay later offers often seem like interest-free deals. But in reality, this 0% interest rate is only valid if the balance is paid off in full by the specified due date. If there’s even a small amount left unpaid after the deadline, interest begins accumulating at rates that can exceed 25% in certain instances. So, be cautious—it's easy to unintentionally rack up interest if you're not careful to clear the balance before the promotional period expires.
Effect on credit ratings
Although buy now, pay later is not a conventional credit card or loan, the service providers report payment activity to credit bureaus. As a result, missing payments or failing to complete the installment plan could negatively impact your credit score, making it harder to secure approval for mortgages, car loans, credit cards, or other financial products in the future. Recklessly using buy now, pay later can quickly wipe out any savings you might have enjoyed during events like Prime Day.
Restricted consumer protections
Using a credit card comes with valuable protections such as extended warranty coverage, price protection, and the ability to challenge fraudulent charges. In contrast, buy now, pay later plans often lack these benefits. If anything goes wrong with your Prime Day purchase or the retailer fails to resolve the issue, you’re responsible for sorting it out. The wisest choice is to only buy what you can afford during Amazon’s Prime Day event, no matter how tempting the deals may be.
While buy now, pay later options can be useful for larger purchases, it's best not to take on debt for routine expenses. Keep checking back for more updates from Mytour coverage of Prime Day to find the best available deals this fall.
