Deal or No Deal?

Buy now, pay later plans are soaring in popularity. But convenience and affordability may come at a high price

- KERRI ANNE RENZULLI

IT SOUNDS LIKE ONE OF THOSE TOO-GOOD to-be true propositions: Buy an item online, shell out just a fraction of the price at checkout and pay the remainder in installments over time, typically at no extra cost. As online shopping has soared during the pandemic, the popularity of these new payment programs, known as buy now, pay later (BNPL) plans, has skyrocketed as well. Last year alone, Americans spent $20.8 billion through these services, with purchases overall up 230 percent since the start of 2020, according to a study by Accenture commissioned by Afterpay, one of the leading players in the field.

Traditionally offered just for online spending by financial tech companies like Affirm, Klarna and PayPay Credit in addition to Afterpay, the types of BNPL plans available and the companies that provide them has grown sharply. Now the plans have been extended to include some in-store purchases too, and credit-card issuers are getting into the act as well, offering their own versions of installment payment plans. In other words, they’re everywhere these days. While estimates of use range widely, the consensus suggests that between at least one-third to one-half of Americans have used an extended payment plan at least once and that roughly three-quarters of them are repeat customers.