NASHVILLE, Tenn. (WTVF) — As the holiday shopping rush ramps up, many people are turning to “Buy Now, Pay Later” to help cover gifts, especially if money is tight.
But these plans, while convenient, can quickly snowball into debt and now they may show up on credit reports!
It’s easy to be tempted by Buy Now, Pay Later. For Pamela Reyes, it seemed like a good way to stretch her budget.
“A big portion of it was just convenience, being able to split the payments, so I wouldn’t have to take big hits to my bank account,” said Reyes.
But as Pamela found – it’s very easy to lose track of Buy Now Pay Later loans, especially when taking out more than one at a time.
“The smaller ones kind of took me off guard because I forgot about them. If I'd been in a more of a paycheck to paycheck situation that could have been kind of disastrous,” Reyes added.
Consumer Reports’ investigations have found Buy Now Pay Later can lead to overspending and sometimes debt.
People who miss Buy Now, Pay Later payments can get hit with higher-than-expected fees or interest, and those missed payments can even show up on their credit report.
“Some Buy Now, Pay Later lenders report missed or late payments to the credit bureaus, which could hurt your credit score just like missing a credit-card bill. That’s why it’s so important to stay on top of the loan payments,” said Consumer Reports Investigative Reporter Lisa Gill
When using these services, Consumer Reports recommends you carefully select which loan you’re applying for and determine if it will charge you fees or interest!
“Avoid taking multiple loans out at once. And if you do, try to stick with the same company so you’re not managing payments from different places,” said Gill.
Set reminders for every due date so you don’t miss a payment or risk overdraft fees.
And keep this in mind when it comes to returns: it’s much easier to sort those out with a credit card. With Buy Now, Pay Later, the process can take longer and you may still be on the hook for payments until everything is resolved.
As for Pamela, her experience has taught her to be extra careful with anything involving payments.
“If you could not afford to make the payment in one go. I would not even consider "Buy Now, Pay Later,” Reyes added.
Pamela is also on a debt management plan with the nonprofit Money Management International to reduce her credit-card debt, and she says it has helped her strengthen her budgeting habits and stay away from debt she doesn’t need.
Do you have more information about this story? You can email me at jennifer.kraus@newschannel5.com.
If you're looking for a stocking stuffer, here's a cool idea from an autistic teen to help benefit the Nashville Zoo. I had a chance to see some of Will Woods' work as a judge for Bellevue's Holidays in the Vue Christmas parade.
- Lelan Statom
