PHILADELPHIA (KYW Newsradio) — A growing number of Americans are using buy now, pay later programs to pay for necessities like grocery items, and new research finds many are becoming overwhelmed with the number of purchases they’re financing.
Companies like Klarna and Afterpay offer to split many online purchases so buyers can spread the cost over time. Ted Rossman, a senior industry analyst with Bankrate, found nearly half of buy now, pay later users experienced a problem like overspending or regretting a purchase.
“Think about the total cost of ownership, not just those biweekly or monthly installments,” he said. “It’s kinda like that whole infomercial thing about, 'oh four interest-free payments of $19.99 and it could be yours.’ Sometimes you're browsing on your phone and you’re on some e-commerce site, and it’s like 'Hey, do you wanna split this into installments?'”
Rossman said alternative payments are useful for making large purchases. However, a recent LendingTree survey found a growing number of people are using them to pay for purchases as small as groceries.
“If you’re financing groceries over a period of time and you’re gonna need more before that plan is even paid off, you’re kind of stacking debt on top of debt, and that can be worrisome,” he said.
When using buy now, pay later services, Rossman recommends reading the fine print and using them responsibly. He warns not to overlook the debt traps or be in a rush to buy.