KSL INVESTIGATES

Gephardt: Are Buy Now, Pay Later Retail Loans Worth It?

Dec 18, 2020, 8:20 AM

SALT LAKE CITY, Utah – With the pandemic pushing more people to shop online, the “buy now, pay later” payment option is becoming increasingly more popular.

But do these retail loans make financial sense for shoppers?

The option allows shoppers to break up their purchases into payments without interest. So what’s there to worry about?

Companies like Affirm, Afterpay, PayPal Credit and Klarma will spread out payments on purchases from shoes to Peloton bikes.

It works like layaway, except you actually get the item before you’re done making payments.

You won’t get zinged for interest, so how are these companies making money?

Ted Rossman, a senior analyst with credicards.com, has the answer.

“The store takes a little bit of a haircut,” he said. “Maybe it’s like 5 or 6%, but the advantage is that they get the money now and that they book a sale.”

There is one catch for shoppers: fees.

“The late fee, though, can start right away,” Rossman said. “They can also ban you from future transactions on the platform.”

Being late can also mean deferred interest and penalties. Plus, you won’t get the same benefits as a credit card.

“So you might be sacrificing rewards,” he said. “You might be missing out on other buyer protections like fraud protection, extended warranties.”

The biggest concern is that the buy now, pay later option often means a soft credit check or no credit check at all. There’s no real solid look into your financial situation to see if you really can afford that $2,000 exercise bike.

“You have to be careful,” Rossman said. “There’s an inherent danger to buying something now that you might not be able to afford with the promise to pay for it later.”

The rise of buy now, pay later hasn’t escaped the attention of the big banks. Many, like Citibank, Chase and American Express, now offer an option to pay off a purchase in installments with no interest.

If you have a problem you can’t solve, give it to Gephardt to try. Call 385-707-6153.

KSL 5 TV Live

KSL Investigates

Matt Gephardt meeting with Denis Hawkins after a rental car company after they ignored his calls fo...

Matt Gephardt

Get Gephardt helps Spanish Fork man clear up insurance claim for rental car damage

Get Gephardt clears up an international rental car insurance standstill.

22 hours ago

FILE - An airplane flies through the clouds in Salt Lake City. (Jeffrey D. Allred / Deseret News)...

Matt Gephardt

How recent airline incidents are changing habits and impacting airfare costs

After a year of headlines lamenting runway incursions and midair close calls, the wheels may be coming off for the airline industry. Literally.

2 days ago

Josh Kochevar died unexpectedly last month. The unhappy task of writing the obituary fell to his ol...

Matt Gephardt and Sloan Schrage

How scammers are using counterfeit obituaries to profit off deaths of loved ones

You have probably heard of stories where an empty home was burglarized while everyone was attending a funeral service. Or stories about thieves breaking into cars parked at a funeral. Now, artificial intelligence has opened a new way for crooks to capitalize on grief.

3 days ago

A person scanning a recently generated QR code....

Matt Gephardt and Sloan Schrage, KSL TV

How to protect yourself from fake QR codes scammers use to steal money and info

Here's what you need to know about QR codes and protecting yourself from scammers.

7 days ago

General view outside of the Delta Center ahead of the NCAA Men's Basketball Tournament on March 19,...

Matt Gephardt

NCAA Tournament basketball is coming to Salt Lake and so are the ticket scams

As March Madness excitement ramps up, so do the odds of buying pricey tickets to tournament games that turn out to be fakes or non-existent.

8 days ago

About a year ago, the KSL Investigators went under the hood of some "connected" smart cars to see w...

Matt Gephardt

Internet-connected cars may share driver info with insurance companies, what it means for premiums

some internet-connected vehicles are sharing our driving habits with our insurance companies

9 days ago

Sponsored Articles

Women hold card for scanning key card to access Photocopier Security system concept...

Les Olson

Why Printer Security Should Be Top of Mind for Your Business

Connected printers have vulnerable endpoints that are an easy target for cyber thieves. Protect your business with these tips.

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light Up Your Home With These Top Lighting Trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for Hassle-Free Computer Repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

Close up of finger on keyboard button with number 11 logo...

PC Laptops

7 Reasons Why You Should Upgrade Your Laptop to Windows 11

Explore the benefits of upgrading to Windows 11 for a smoother, more secure, and feature-packed computing experience.

Stylish room interior with beautiful Christmas tree and decorative fireplace...

Lighting Design

Create a Festive Home with Our Easy-to-Follow Holiday Prep Guide

Get ready for festive celebrations! Discover expert tips to prepare your home for the holidays, creating a warm and welcoming atmosphere for unforgettable moments.

Battery low message on mobile device screen. Internet and technology concept...

PC Laptops

9 Tips to Get More Power Out of Your Laptop Battery

Get more power out of your laptop battery and help it last longer by implementing some of these tips from our guide.

Gephardt: Are Buy Now, Pay Later Retail Loans Worth It?