Easy Way To Go Broke?

Buy now, pay later services (BNPL services) are a new version of layaway purchases. The typical app lets you spread payments into four chunks.

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These services aren't free cash, though. Instead, the respective app offers micro-installment loans that let you finances purchases.

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Here are seven overlooked dangers of using these financial instruments.

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By their very nature, pay later services make it easier for you to spend money. For example, loan apps make qualifying easy and often have a spending limit between $50 and $1,000.

BNPL apps sell themselves as the perfect alternative to credit cards. Unfortunately, most buy now, pay later companies only perform a soft credit check. The app won't help you boost your credit if you make timely payments.

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Buy now, pay later apps market themselves as a fee-free way to get monthly financing on a purchase. But, of course, that is only true if you don't miss payments.

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You may face an interest penalty if you miss a payment or don't pay off the entire amount in the given time. The most common is deferred interest, which you may see with balance transfer credit cards, which can lead to a nasty surprise.

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The CFPB says there is some federal and state oversight on BNPL services, but it doesn't provide much protection to consumers. This leaves users prey to a need for common guardrails around hidden fees, disclosures, and interest rates.

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Easy Way To Go Broke?

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7 Dangers of Buy Now, Pay Later Apps

Buy now, pay later services (BNPL services) are a new version of layaway purchases. The typical app lets you spread payments into four chunks.

These services aren't free cash, though. Instead, the respective app offers micro-installment loans that let you finances purchases.

Here are seven overlooked dangers of using these financial instruments.

By their very nature, pay later services make it easier for you to spend money. For example, loan apps make qualifying easy and often have a spending limit between $50 and $1,000.

It's Easy to Overspend

BNPL apps sell themselves as the perfect alternative to credit cards. Unfortunately, most buy now, pay later companies only perform a soft credit check. The app won't help you boost your credit if you make timely payments.

They Can Harm Your Credit

Buy now, pay later apps market themselves as a fee-free way to get monthly financing on a purchase. But, of course, that is only true if you don't miss payments.

Fees and More Fees

You may face an interest penalty if you miss a payment or don't pay off the entire amount in the given time. The most common is deferred interest, which you may see with balance transfer credit cards, which can lead to a nasty surprise.

Exorbitant Interest Rates

The CFPB says there is some federal and state oversight on BNPL services, but it doesn't provide much protection to consumers. This leaves users prey to a need for common guardrails around hidden fees, disclosures, and interest rates.

There's Limited Regulation

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