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The Pros and Cons of Buy Now Pay Later Programs

by Allison

Layaway programs are some of the longest standing institutions in the United States. First appearing in stores during the Great Depression, layaway programs remained a popular option until gift cards largely took their place in the 1980’s.

But that’s not the end of the story for layaway. Companies like Afterpay, Zip, and Klarna provide a layaway option for online shopping.

But even though the option to buy now and pay later is available virtually everywhere, should you take it? Let’s run through the pros and cons of online layaway programs.

What is Buy Now, Pay Later? 

Buy now, pay later programs are online layaway programs that enable shoppers to make their purchases through point-of-sale installment loans. Most of purchases come in four installments, and only require you to out down a fraction of the purchase to have it shipped to you.

The subsequent payments are interest-free and can be deducted automatically from the card you put the down payment on.

The Pros of Buy Now, Pay Later

Here’s why people are loving buy now, pay later programs.


If you’re waiting on a paycheck or trying to keep your credit utilization low, this could be a pretty convenient option.

High Credit Not Required to Qualify

You don’t need a hard credit check to use online buy now pay later programs, so as long as you make your payments               on time it should not impact your credit.

Can Have Less Interest than Credit Cards           

There’s nothing good about credit card debt, and if you’re avoiding it at all costs then these programs could be a good way for you to segment big purchases. 

The Cons of Buy Now, Pay Later

If you’re considering making your next purchase with a buy now pay later program keep these risk-factors in mind.

Payments Can be Hard to Track 

If you don’t automate your payments, they can easily become lost and accumulate interest without you even realizing it. Be sure to automate your payments every time you choose the buy now pay later option.

Potential Late Fees

Keep in mind that late payments will receive hefty fees and accumulate interest over time.

No Credit Rewards

Using these programs in lieu of a credit card won’t pose the risk of bringing down your credit score, but they won’t help your score of give you any added benefits. There are no cash back programs associated with buy now pay later programs.

Returns Can be Difficult  

When you make your purchase through a third-party program, returns can get messy. We would recommend not to use one of these programs is you think you may make a return. 

In Conclusion

Whether or not you should participate in these programs is a personal choice. But if you tend to have issues with keeping track of mobile payments, then this probably isn’t going to be the best bet for you. And if you are using a buy now pay later account because you can’t use a maxed-out credit card, then it’s best that you stay away from these programs entirely.

If you want to steer clear from traditional credit cards, then but now pay later can be a good option for you, but you will not receive the same benefits that come with a credit card.

If you’re the type of person to always be on time and organized with your mobile finances, then an online layaway could be a convenient way to get what you want without going over your credit limit.

Here’s what you need to remember when you make a buy now, pay later purchase:

  • Set up automatic payments on a well-funded account
  • Track payment dates in your calendar so you won’t be surprised
  • Factor in the entire purchase amount into your budget