As the holiday shopping season begins, what are your thoughts on Buy Now Pay Later plans? They appear to be popular these days. I’m sure you’ve come across them if you’ve shopped online in the last year: Sezzle, AfterPay, PayBright, to name a few.
It reminds me of the old layaway plans back in the day when I worked in retail. You could put something on hold by putting down a deposit. Once you paid the balance off in full, it was yours to take home. The big difference with these plans is you get to take it home right away.
You could argue it’s the same as paying with a credit card. Definitely the same concept but under these plans there’s no interest or fees and no impact on your credit score.
Fellow business owner, Pamela George, Financial Literacy & Credit Counsellor, recently wrote a great article about these very plans from a consumer point-of-view. She was getting questions from her clients about whether or not they were a good idea. Pamela diligently did her research and tried them out so she could report back firsthand. Check out her results in her recent blog post: How do “Buy Now, Pay Later” plans work?
And btw, she’s the “Pamela hoodie” Pamela which I’m thrilled to report is sold out. If you missed out on the raspberry Pamela, I may do it again in a different colour. Keep an eye out.
I was also curious about the Buy Now Pay Later from the other side as an e-commerce business owner. I’ve been approached several times by one of these companies to jump onboard. My initial reaction has been not to leap right away. They come with a fairly hefty price tag on the retailer end.
Plus, I was brought up to be risk averse when it comes to money. Add to that my accounting background and, well, I’m not a fan of borrowing ahead. I had it drilled into my head, and in turn, have drilled it into my daughter’s head, that you don’t put anything on a credit card unless you have the money to pay for it. I don’t want to pay the exorbitant interest rates on an outstanding balance.
I’ve also had it in my mind that you, my customer, would typically not use the Buy Now Pay Later plans. You’d use your debit or credit card to pay up front just like me. That my price points don’t require an instalment plan. My highest ticket item right now is the Lindsay Bamboo Cardi-Robe at $159.
But, I’ve been wrong many times before in assuming others think like I do. So, I’m keeping an open mind.
I always value your input. What do you think? Have you used the Buy Now Pay Later plans? If so, do you like them? If you haven’t used one yet, do you think you’ll use one in the future? Does it depend on the cost of the item? For me, I might consider using it for a higher priced item. But, like anything, it can be a slippery slope.
I don’t even like putting food and gas on my credit card because by the time I have to pay for it, it’s used up, gone. I don’t have anything to show for it. But, that’s just my ultra risk adverse alter ego accountant side talking!
If you stick with Pamela’s advice, “Know your limit and stay within it”, you’ll be fine.
Until next time,