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6 Most Popular Buy Now, Pay Later Apps — and What Experts Think of Them
BNPL has become a Gen Z shopping staple. Is it a bad idea?
If you’re going to buy something that costs $100, would you rather shell out the full $100 right now, or pay $25/month for the next four months? Thanks to Buy Now, Pay Later (BNPL), the trendy loan service favored by Gen Z, you can delay your shopping payments by taking out an installment loan paid back over time to your preferred service. BNPL allows customers to use payment plans, so you owe smaller amounts of money over time rather than paying the full amount upfront. Some argue that BNPL can be used as a budgeting tool while others point out that, according to Credit Karma, Gen Z holds an average debt of $16,283 mainly from student debt and auto loans — and BNPL only increases that amount.
Plus, it truly seems like a new BNPL service, like Affirm, Klarna, or Afterpay, pops up each year. What’s the difference between all of them? Which one is the best? Do you end up paying more because of interest, like a credit card?
The good news is that most of the popular BNPL plans (like a simple Pay in 4 model, where your purchase is divided into four equal payments) will not charge you any interest. However, keep an eye on the APR (Annual Percentage Rate) that comes with larger, multi-month BNPL loans — if they charge an interest rate and you miss one or more payments, your purchase could end up costing significantly more in the long run.
And Buy Now, Pay Later isn't the same as a credit card, either, although you want to avoid paying interest by staying on top of your payments for both. They're two different tools — responsibly using credit cards will help you build credit, whereas BNPL isn't a recommended way of building credit. Applying for certain BNPL loans may temporarily affect your credit score, although that varies by service.
We spoke to multiple financial experts to get their input on the Buy Now, Pay Later trend, and the general consensus is that you need to shop with discretion.
“It’s something I avoid,” admits Morningstar journalist Margaret Giles. “It encourages you to spend beyond your means and I find it can be deceptive. I would ignore your BNPL credit limit and think about what you actually can afford.” UBS Financial Advisor and Managing Director Rachel Gottlieb echoes that sentiment, telling Seventeen, “You need to be smart about it. You don’t want to get into the bad habit of buying something you can’t afford and suddenly not have the funds to pay it off, because that’s how you accumulate debt.”
Carmen Perez, creator of the MUCH budgeting app, notes that BNPL can be used tactfully if the temporary loan will lead to a greater financial pay-off in the near future. “If you have to use BNPL, do it in a way that pays off for your future self, like if you need to use a payment plan to afford a course that'll help you pivot to a higher-paying career,” advises Perez, who recently joined Secret’s Board of Financial Experts to support the brand's initiative to provide 1 million young women with access to financial education. “But how you manage a little will be how you manage a lot, so unless you’re using BNPL for something that’ll be a return on your investment, I don’t see the point of it.”
Avoid Buy Now, Pay Later if...
- You tend to overspend on non-essentials.
- You don't have guaranteed income.
- The purchase is more of a "want" and less of a "need."
- You don't have enough in your bank account to pay off the full loan.
Buy Now, Pay Later might be useful for you if...
- You know how to avoid spending beyond your means.
- The item is an essential purchase for school, work, health, or your future career that you know you'll be able to pay off. Think a laptop, a camera for that photography gig you booked, or a mattress for your first apartment.
- You have a good handle on your monthly budgeting and prefer to spread out payments for a large essential purchase to avoid skewing your budget.
Here are the most popular Buy Now, Pay Later apps and websites, along with everything you need to know about each service's fees and policies to make an informed decision about using BNPL for your purchase.
Afterpay
Credit check: Afterpay runs a soft credit check, which means they take a peek at your score without "pulling" your full credit report,
for new customers. This soft credit check will not affect your credit score.
Annual percentage rate (APR): Varies for monthly payment plans based on your credit score but no interest for Pay in 4 loans.
Late fees: You'll be charged an $8 late fee for payments not completed within 10 days but your total late fees will never exceed 25% of your order value.
Payment period: Pay in four bi-weekly installments, or 6- to 12-month payment plans.
Afterpay is beginner-friendly, thanks to its easy-to-navigate website. You can shop online or in-person at a large number of stores across categories as well. Taylor Price, Afterpay Ambassador, and financial activist, shares that she uses the platform to break up big purchases into more manageable payments to avoid having to dip into her savings account. "It's important to only use BNPL for planned purchases that fit within your spending plan. For example, you could use Afterpay for making a large purchase on a bed that’s on sale for your new apartment in easy installments," says Price.
Klarna
Credit check: Klarna runs a soft credit check for customers that apply for Pay in 4 installments or with monthly financing. This will not affect your credit score.
Annual percentage rate (APR): Up to 29.99% for monthly payment plans but no interest for Pay in 4 loans.
Late fees: After two unsuccessful payment tries, you'll be charged a $7 late fee but your total late fees will never exceed 25% of your order value.
Payment period: Pay in 4 bi-weekly installments, Pay in 30 days, or monthly payment plans.
Klarna is unique in that they offer up to 24-month financing (a.k.a. paying for your purchase over two years), making this tool ideal for spreading out the payments for big expenses. You can use Klarna online or in-person, and their multiple types of payment periods offer flexibility for each purchase.
Affirm
Credit check: Affirm runs a soft credit check for each transaction that will not affect your credit score. They do report positive and negative repayment behavior for bigger loans to Experian, a credit reporting agency, but they will not report 0% APR loans.
Annual percentage rate (APR): 0-36% based on your credit score for their repayment plans, but no interest is accumulated for Pay in 4 loans.
Late fees: There are no late fees for missed payments, but late monthly payments could be reported to credit reporting agencies and your credit score may decrease.
Payment period: Pay in 4 bi-weekly installments, or monthly payment plans from 3 to 60 months.
If used responsibly, Affirm is a great option for BNPL because there are no late fees, ever. However, you'll want to keep an eye on your credit score as bigger loans paid on time as well as late payments may be reported to Experian.
Apple Pay Later
Credit check: Apple runs a soft credit check for customers that apply for loans. This will not affect your credit score.
Annual percentage rate (APR): 0% for Pay in 4.
Late fees: There are no late fees for missed payments, but late payments could be reported to credit reporting agencies and your credit score may decrease.
Payment period: Pay in 4 bi-weekly installments.
If you're constantly using Apple Pay, you'll love the convenience of Apple Pay Later. You can use it anywhere Apple Pay is accepted (in-store and online) and upcoming payments can be easily viewed in the Wallet app.
PayPal Credit
Credit check: PayPal runs a hard credit check for new customers, which means they pull your full credit report rather than just taking a peek at it like they would for a soft credit check. This may temporarily negatively affect your credit score.
Annual percentage rate (APR): Up to 29.99% for monthly payment plans but no interest for Pay in 4 loans.
Late fees: Late fees can be up to $41 and late monthly payments could be reported to credit reporting agencies and your credit score may decrease.
Payment period: Pay in 4 bi-weekly installments or monthly payment plans.
This BNPL option is a line of credit available to you through PayPal, similar to how credit cards offer you a certain amount of credit. Your minimum credit amount will depend on your credit check. Note that PayPal Credit has some of the highest late fees out of BNPL options on the market.
Sezzle
Credit check: Sezzle runs a soft credit check for new customers that will not affect your credit score.
Annual percentage rate (APR): 5.99% - 29.99% for monthly payment plans but no interest for Pay in 4 loans.
Late fees: If you miss a payment by two days, your account will be deactivated and you will have to pay a $15 reactivation fee along with making the late payment. Late payments will be reported to credit reporting agencies and your credit score may decrease.
Payment period: Pay in 4 bi-weekly installments, or 0-18 month payment plans.
Sezzle offers flexibility that other BNPL apps do not, because they allow you to reschedule your additional payments. You can push your payment up to two weeks later for a small fee, and your first reschedule is free. This is a great option for anyone who wants more flexibility to avoid late payments being reported to credit agencies.
Hannah is the assistant shopping editor at Cosmopolitan, covering all things from cute apartment decor to trendy fashion finds, TikTok products that are actually worth your $$$, and the perfect gift to buy for your boyfriend's mom. She previously wrote for Seventeen and CR Fashion Book. Follow her on Instagram for hot takes on red carpet fashion and unhinged updates on the books she’s reading on the train.
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