7 mistakes to avoid when using buy now, pay later

Digitization has made transactions cashless and quick. Now, people don’t have to depend on the available balance in their bank accounts while shopping as they can choose to buy and pay for a product flexibly. Such an option is “buy now, pay later,” which allows consumers to pay for an item later without charging any interest and with quick loan approval. However, there are some mistakes one can avoid while using BNPL: Not making BNPL payments on time It's important to remember that buy now, pay later payments can have varying payment frequencies, such as weekly or bi-weekly, making it easy to overlook them. However, failing to make these payments on time can lead to penalties that may have long-term financial consequences. Additionally, consistently making late payments can negatively impact one's credit score. Failing to read the terms and conditions Different retailers may have rules and regulations with buy now, pay later. Reviewing documents on terms and conditions may seem tedious, but it is important. Not paying attention to such rules and regulations may cause trouble later. One should also actively ask related questions, if any, to the retail store’s customer care. Buying products impulsively Many people may buy products impulsively with BNPL because they do not have to pay up at once. But with impulse buying, one may buy unnecessary expensive products, which wastes money and leads to cluttering. So, before making an unplanned purchase, one should consider whether the product is a want or a need. One should also consider alternatives available at lower prices. Taking multiple loans within a short duration Buy now, pay later is a good option to buy different products one cannot immediately pay for. But if the number of transactions increases considerably, one becomes highly indebted, which can be overburdening. It is also difficult to track the last payment dates for each transaction. So, limiting BNPL to only a few transactions every month is good. Not being aware of the retailer’s dispute regulation policies Credit cards, banks, and financial institutions protect consumers from billing errors and poor product quality. This is not the case with BNPL. However, individual retailers may have their policies around this mode of payment and how to resolve such issues. For this reason, one should always inquire with the retailer about such dispute regulation policies before using BNPL. Not inquiring about the store’s return policies with BNPL Return policies usually differ among stores, and there may be specific ones regarding those using the BNPL option. For instance, in some cases, the BNPL payment can be canceled only when one presents evidence that the store has processed the return. Awareness of these specific return policies allows consumers to take action quickly if a product needs to be returned or exchanged. Failing to set a BNPL budget With BNPL, one may be tempted to make all payments through this mode, which is convenient and hassle-free. However, using only BNPL can cause overspending and problems repaying the money when the due date approaches. Therefore, setting a clear budget for BNPL transactions helps prevent such issues.