Buffalo, N.Y. (WBEN) - Budgets are tight this holiday season, and payment options like 'Buy Now, Pay Later' can seem like a get-out-of-jail-free card. It's important though not to let 'Buy Now, Pay Later' become 'Buy Now and Forget About It."
One risk consumers are taking on by going on a payment plan is that they'll count towards your credit score beginning next year.
"That's a double-edged sword. If it's used in a positive way you can essentially build credit. But the risk is if you default or misunderstand the terms and conditions of these sort of 'mini loan' agreements you can have a real negative impact on your credit, which snowballs," consumer rights attorney Rebecca Carter from with Friedman, Framme and Thrush tells WBEN.
Frequently using payment plans can also lead to problems budgeting. Carter says putting multiple items at once on a payment plan can lead to added interest and additional penalties.
"If you're just working from one account or one credit card it's very easy to say 'oh here's what I'm spending, here's what I owe'," Carter tells WBEN. "But if you are inadvertently choosing other options of payment, like a different buy now pay later company, you now are not just working with that one credit card, you're now working with a multitude of different companies."
A piece of advice from Carter if you're using the Buy Now, Pay Later option, take a good look at your monthly budget and take good notes.