Should You Use 'Buy Now, Pay Later' for 2022 Holiday Purchases?

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  • Buy Now, Pay Later (BNPL) services allow you to pay for items in installments rather than all at once.
  • This is convenient, but there are other options you should weigh as well.
  • Consider relying on layaway (if offered) or a rewards credit card for purchases, or even save up over time to make them.

This decision could affect your finances long after the holidays are over.

Crushing inflation is going to make the holiday season pretty expensive -- as if it wasn't before. Shoppers who aren't able to pay for their purchases in full right away might consider reaching for a credit card, but there's another payment option that's been gaining traction over the last several years.

Buy Now, Pay Later (BNPL) services enable you to buy your items right away and pay for them over time, often without interest. But it's not a great choice for everyone. Here's what you need to know about BNPL.

How does Buy Now, Pay Later work?

Buy Now, Pay Later services, including Affirm, Afterpay, and Klarna, enable you to make purchases at participating retailers with just a small upfront payment. This is often 25% of the purchase price.

Then, you pay the rest back over time in a series of interest-free installments. You can have the money automatically deducted from your bank account or charge it to a credit card.

Pros of Buy Now, Pay Later

Buy Now, Pay Later offers the following advantages:

  • No waiting for your items: Unlike layaway, you don't have to wait until you've paid for the items in full before you get to bring them home.
  • Soft credit check: Most BNPL services use a soft credit check, which doesn't hurt your credit score.
  • No interest if you pay on time: Unlike a credit card, BNPL services enable you to pay back what you owe over time without interest.
  • Fast approval: You can often enroll in BNPL in a store's online checkout and complete the transaction the same day.

Cons of Buy Now, Pay Later

Buy Now, Pay Later services have their drawbacks too, including:

  • Extra fees for late payments: Those who aren't able to keep up with their BNPL payments could rack up additional charges.
  • No rewards earnings: Unlike using a rewards credit card, BNPL doesn't enable you to earn rewards you can put toward future purchases.
  • Increased temptation to spend more: Some people might spend more while using BNPL than they would if they were paying full price for items. This could lead to debt if you're not careful.

Alternatives to Buy Now, Pay Later

If you don't think BNPL services are the right choice for you this holiday season, try one of these options instead.

Waiting to make a purchase

Begin saving up now for your holiday purchases and pay for your items in full upfront so you don't have to borrow money or worry about interest charges at all. However, this may not be feasible if you're hoping to buy a popular item that's likely to sell out quickly.


Layaway also enables you to pay for an item over time, but unlike BNPL, you can't bring your items home with you until you've paid for them in full. Many department stores and some online retailers offer layaway, but it's important to review the terms first. Be sure to learn if there are any deadlines or associated costs before you sign up.

Rewards credit card

Using a rewards credit card can help you earn points you can put toward other holiday purchases. You'll also have a little bit of time between when you make your purchase and when you have to pay for it. But you should never charge items to your credit card that you aren't sure you can pay back in full at the end of the month. Carrying a balance on a credit card is costly and the interest you'll pay far outweighs any benefit you get from rewards.

How to get started with Buy Now, Pay Later

If you are interested in using a Buy Now, Pay Later service, you should first check with the retailer you're shopping with to see if this is an option. Many companies that offer BNPL now advertise it as a payment option, but for others, you may have to add the item to your cart and proceed as if you were going to checkout to see if the company works with a BNPL provider.

Next, review the terms of the service. Pay attention to how much you have to pay upfront, what your installment payments will be, and how often you have to make the payments. You should also look into what fees the company can charge you if you aren't able to keep up with your payments.

Finally, keep track of how much you're spending to avoid going overboard. BNPL purchases can feel pretty small when you're only paying 25% down, and if you're shopping on multiple sites, you can rack up quite the bill before you realize.

If you're worried about accumulating debt, BNPL may not be the right choice for you. Try one of the other suggestions listed above and start planning your holiday shopping list well in advance so you know what you need and how much you can afford to spend.

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