Installment paying

Buy now, pay later — but be careful

Those cheesy TV infomercials promising “three easy payments of $19.99” were ahead of their time. While calling a toll-free number to buy as-seen-on-TV items is no longer in style, the idea of paying in installments remains popular thanks to a booming marketplace of buy now, pay later (BNPL) services.

BNPL is still a form of debt, though. Here are some ways to use BNPL thoughtfully.

1 Know what you can afford

Andrew Gold, a financial advisor at Prestige Wealth Management in Southlake, Texas, has used BNPL services to finance large purchases, including travel bookings, business purchases and a new mattress.

As someone who frequently discusses spending with clients, he recommends considering BNPL when you can afford to pay for something in full, but paying in installments would help you better manage your cash flow. Before you choose a payment plan, review what you have in your bank account and how much money you earn each month, so you know you can afford the payments along with your other obligations.

2 Review the fine print

Before you make a major purchase, find out how you can get your money back if you return the item, it gets lost during shipping or arrives damaged. What rights do you have if the merchant won’t refund your money?

If the merchant allows for refunds, you can get your money back. Affirm, Klarna and Afterpay will refund you in full, for example — though Affirm notes that if your plan includes interest payments, you won’t get that money back.

Should you need to dispute a charge because the item is missing or damaged, your first step is to contact the merchant directly, much like you would if you paid with a credit card.

3 Go in with a strategy Stay

organized by using BNPL for very specific purposes, like a series of purchases for one event. Alexandria Broward used BNPL when she and her now-husband decided they wanted to elope in a month’s time.

With just three weekends to find a dress and sort out other logistics, Broward put some expenses on credit cards and used BNPL for her outfit. Her tactic was to avoid putting the whole cost on credit cards.

“It was a great solution and service to have in my situation, given how last-minute everything was,” Broward says.