It's Better to Buy Now Instead of Paying Later

Spring Break, Music Festivals, and random trips on the weekend are all things that you look forward to during your College experience. While these things can be pricey, utilizing Buy Now Pay Later Platforms allows you to enjoy these excursions at a low cost at first.

A Buy Now Pay Later platform allows you to make large purchases through a payment plan system. Whether you pay once a month or every two weeks, BNPL platforms will enable you to enjoy the finer things in life.

However, a $200 balance is still a $200 balance, no matter how you split it up. When you use these platforms, you often don’t have the funds to pay in full. While platforms like Affirm allow you to pay late without fees being applied, Klarna has an autopay system to collect payments, whether the funds are available or not.

“people are literally going into debt and spending well above their means because of this”

These platforms target students, like you, through popular social media influencers on TikTok and Instagram. Influencers highlight the most popular and expensive trending products to persuade you to invest through BNPL platforms under the guise of becoming “just like them."

While some students are consistently falling into the trap of BNPL, many of them are using their platforms to expose these companies and spread financial literacy to give you a better understanding of BNPL. Influencers like Ecommjess, who brands herself as a Personal Finance Educator, continue to inform you about the negative impact of BNPL. By saying things like “people are literally going into debt and spending well above their means because of this,” Ecommjess ensures that you understand what BNPL is and how it can lead to bad decisions with personal finances.

Other influencers, like Ashley’s Corner, hint at how using multiple BNPL platforms can pile up at once and turn into an entire bill every other week or every month. Because most BNPL platforms do not require a credit check or even an established credit history, consumers can have multiple payment plans at once on various platforms. When payment dates come up and you don’t have the funds to pay, you can accrue late fees and sometimes interest rates.

It is crucial to manage your funds properly and only use BNPL platforms in urgent situations or, if you know you will receive the funds soon, pay the balance out in full. Here are a few tips on how to use BNPL wisely so that you can make sure you’re making wise financial decisions.

1. Don’t use multiple BNPL platforms. You will have all your payment plans in one central location using one platform. By using various, you not only run the risk of missing payments but also be subject to paying different interest rates and late fees.

2. Only have up to two active payment plans. Having more than two payment plans at once can lead to spending over your budget. Use BNPL for things that you need but have last-minute notice.

3. BNPL platforms will affect your credit score. While BNPL platforms did not initially affect credit scores, late payments and other additional fees that can be applied to BNPL accounts will now reflect on Equifax credit reports and negatively impact your credit score. When using these platforms, be sure to make sure you have the funds to not only make payments but make them on time.

If you are struggling with BNPL or credit card payments and need guidance on tackling these issues, consider participating in The University of Minnesota - Financial Wellness Counseling through One Stop Student Services. Boynton Health no longer offers free, confidential financial counseling through LSS Financial Counseling.

Written by Domonique Green, Edited by Maurice Perkins