ST. LOUIS, MO (KMOX) - In recent months you may have noticed the option to pay in installments for online purchases. What are the pros and cons? KMOX News asked Bankrate.com Credit Card Analyst Ted Rossman.
Rossman tells us, buy now pay later services are booming, "These have really been taking off. Most of these companies are reporting things like 200%, 300% percent gains. Afterpay just reported $2 billion worth of sales in November, so these are definitely big business."
Rossman says the most common offer is six weeks with no interest on purchases. But he points out Peleton has a deal with Affirm to offer several years of no interest payments on its bikes. "Retailers like it because it encourages purchases, especially impulse buys. There's research that people spend more when they use one of these services."
Rossman says the catch is if you don't pay in full within the term. That's when consumers may be charged high interest rates, "that can vary wildly. It can be as low as zero percent or it can be as high as 30%. You really need to look at the fine print of these services."
He says some consumers like to avoid open-ended credit and are able to pay within the installment period. Rossman adds for others it may be better if they simply pay with a credit card and pay their balance in full. He points out credit cards have better protections for fraud and dispute resolution.
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