However, there may be times when you need to pay for larger items over time and don't want to pay excessive interest rates in order to do so.
Enter BNPL (buy now, pay later) services.
A comparison of services that allow you to buy now and pay later.
The majority of BNPL services work in the same way.
They run a light credit check to qualify you and decide your spending limit, there are no interest fees, and you must pay the first payment at the time of purchase.
Then you'll have three more payments to make, one every two weeks.
At checkout, you can usually gain fast approval.
In addition, some providers provide a virtual card that you may put in your phone's digital wallet and use to make in-store purchases.
It can be tough to discern between the various BNPL services and pick which one to utilise.
Purchase limitations, late payment fines, and the ability to pay in monthly instalments (though you'll almost always have to pay interest on this choice) are all major distinctions across services.
Affirm, Afterpay, Klarna, and PayPal Credit were the top four providers according to our research.
Affirm
How it works: Make four payments, one every two weeks, to "Pay in 4"
Alternatively, you can opt for a payment plan that is paid in monthly instalments.
You can use a one-time-use virtual card to pay anywhere, including in stores.
Bank account, debit card, credit card (but only for certain purchases), and check payments by mail are all options for payment.
The maximum amount you can spend is $17,500.
Soft credit check
Experian may get information about your payment history, including overdue payments.
Interest: For the Pay in 4 plan, there is no interest; for the monthly payments plan, there is a 0% -30% interest rate.
There are no late fees.
Afterpay
How it works: Make the first payment when you buy the item, then three further payments over the next six weeks.
Bank account, debit card, and credit card are all acceptable payment methods.
Purchase limit: Purchase limitations start at roughly $500 and gradually climb over time.
Soft credit check
There is no interest.
Late fines are limited to 25% of the purchase price.
Klarna
How it works: "Pay in 4" is a four-payment plan with no interest that is paid every two weeks.
A no-interest "Pay in 30 days" plan and a monthly plan with flexible financing are also available.
Pay with the Klarna app when you shop online.
You can generate a one-time-use card and save it in your phone's digital wallet to pay in-store.
Bank account, debit card, and credit card are all acceptable payment methods.
Purchase limit: There is no set restriction on how much you can spend.
With every purchase, an automated approval decision is made.
For the Pay in 4 option, there is a soft credit check.
The monthly financing option is difficult.
There is no interest.
Late costs: For the Pay in 4 option, late penalties of up to $7 may be assessed after 10 days (not to exceed 25 percent of the instalment payment amount).
Credit with PayPal
How it works: To take advantage of the "Pay in 4" offer, make the first payment to complete the purchase after it has been approved, then make the next three payments, one every two weeks.
Alternatively, choose the newer "Pay Monthly" plan, which divides the cost into monthly instalments over a 6- to 24-month period, with the first payment due one month after purchase.
Repayment options include bank account, debit card, and credit card (but not PayPal balance).
The purchase limit for Pay in 4 is $30-$1,500; for Pay Monthly, the limit is $199-$10,000.
Pay Monthly undertakes a soft check for prequalification and a hard inquiry when a customer accepts the loan and continues forward with financing alternatives.
Interest: 0% -29.99 percent for Pay in 4; 0% -29.99 percent for Pay Monthly.
There are no late fees.
Is it a good idea to use the "buy now, pay later" option?
The ease of paying off a product in four instalments while avoiding interest costs is enticing.
While there are presently a number of BNPL services available, if Apple Pay Later launches later this year, they will face stiff competition.
If you want to get the most out of your points and miles, BNPL isn't the best option.
Although many sites allow you to add a credit card for repayment, you'll forfeit any category benefits you could have earned by shopping directly with the seller.
Furthermore, using one type of debt to pay off another type of debt isn't a good idea, especially if you can't pay off the charge on your credit card when it's due.
Is it possible to buy now and pay later with my Capital One card?
If you choose to use a credit card for payback, keep in mind that you won't be able to use any Capital One credit cards because the bank has prohibited the use of such cards for buy-now, pay-later transactions.
Capital One debit cards and checking accounts, on the other hand, can be linked.
Final thoughts
Consider credit cards with 0% introductory annual percentage rates and credit card services like Chase's My Chase Plan and Amex's Pay It® Plan It® (no enrollment required for the Amex feature), which offer instalment plans with fixed monthly fees and no interest charges for larger purchases that you'd like to pay off over time while still earning rewards.
Responsible spending should remain the aim regardless of the BNPL service or credit card offer you choose.
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