“Buy now, pay later”: risks, benefits of the new popular payment system offered by Target, Walmart, Amazon, etc.

NEW YORK – “Buy now, pay later”, the latest retail trend, is a payment system that allows customers to exit a store – or pay online – with the items they want and pay their interest – free installments thereafter.

Objective announced on Wednesday that it joins with other major retailers like Amazon and Walmart in offering the buy now-pay later option, giving online shoppers the ability to order and pick up items same day while spreading payments over weeks or months.

Unlike layaways, “buy now, pay later” allows customers to take their purchases home before making payments, said Hitha Herzog, research director at H Squared Research.

Experts predict that a growing number of businesses will soon partner with third-party service providers like Afterpay, Affirm, and Sezzle to embrace this option.

And it’s no wonder: in a recent survey of 2,005 online consumers, 60% said they used “buy now, pay later”. The option is especially appealing to younger buyers and people who don’t have a credit card, experts say.

“According to 38% of users, Buy Now, Pay Later will eventually replace their credit cards, and more than half (56%) say they would rather Buy Now, Pay Later than use credit cards to purchases ” the researchers observed.

Installment plans are also popular with retailers because they encourage customers to spend more money.

“Consumers are really worried about whether or not they will be able to get their products in time for Christmas. So when you see a “buy now, pay later”, you can get your product right away. You don’t have to worry about the rush to buy, ”Herzog said.

Yet experts warn that the option also has its risks.

“Payments are interest free if you pay on time,” Herzog said. “If you miss a payment or don’t pay, they’ll charge you a late fee.”

Buy-now loans are like any other form of debt, so buyers should be careful and thoughtful to avoid buyer’s remorse or financial downfall.

And these purchases do not benefit from the reward points and cash back offered by credit cards.

Experts say buyers who want to use the buy now-pay later option for the first time should start small and consider budgeting to avoid missed payments. Make sure you read the terms and conditions of these programs and understand the consequences of not meeting payment deadlines.

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