Buy Now, Pay Later Is Debt You Have to Track Yourself

Buy now, pay later (BNPL) plans are loans, and when you use more than one app, no single service shows the full amount you owe. Before you take on another split payment, open every BNPL app you use, add up what is due over the next month, and build that total into your budget just as you would any other debt payment.

In a single week, someone could split a $120 pair of sneakers, $280 headphones, and a $400 mattress into four payments each, while $200 is also leaving a checking account every two weeks through three separate apps on different due dates.

Research from the Consumer Financial Protection Bureau on six major lenders found that about 63% of BNPL borrowers in 2021 and 2022 had overlapping loans at some point during each year, and one-third had loans with more than one company.

Pay-in-four plans often charge no interest, which can make them feel less like borrowing, even for people who would never carry a credit card balance. But each plan is still a loan. With one credit card, those purchases would appear on a single statement with one due date. With BNPL, they become three loans across three apps, and none of those apps shows the other balances.

Credit reporting is inconsistent. Affirm reports every new plan, including late and missed payments, to Experian and TransUnion, although that history does not yet count in traditional credit scores. Klarna does not report pay-in-four plans, and Afterpay does not report to U.S. credit bureaus. FICO has created scores that include these loans, but FICO Score 8, the version most lenders use, is not one of them.

For that reason, you should keep your own tally. Write down each remaining payment and its due date on one calendar, since every app withdraws money on its own schedule. Then make sure the account each app uses will have enough cash on every one of those dates.

Most BNPL lenders charge late fees, and an automatic payment that overdrafts your checking account can also trigger a bank overdraft fee. Returning an item does not stop the payments automatically. Afterpay continues collecting until the retailer processes the refund, and Klarna pauses only after you report the return.

Your dispute rights are also weaker than they are with a credit card. A credit card gives you a federal right to withhold payment on a disputed charge while the issuer investigates. A BNPL dispute is handled under the app’s own policy.

Use one simple rule at every checkout: if you could not afford to buy it outright today, dividing it into four payments does not make it affordable.

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