1. It Can Be Confusing
BNPL from large merchants can get complicated if you need to cancel or return an item. Since these services are often handled by third-party providers rather than the retailer, you might find yourself asking, "Who do I contact—the store or the BNPL provider?" This extra layer can create unexpected frustrations in what’s promised as a simple checkout option.
2. Your Credit Score Could Take a Hit
A missed BNPL payment can impact your credit score. As major credit bureaus begin including BNPL activity, late payments may harm your credit much like a missed credit card payment. However, on-time BNPL payments may not yet contribute positively to your score. Be sure to read the fine print and understand how payment disputes are managed.
3. It Can Encourage Overspending
Like credit cards, BNPL services can encourage overspending. Their ease and fast checkout process can tempt you to buy things that may not fit your budget. While BNPL might be marketed as a friendly alternative to credit cards, it’s still debt—and it can add up quickly, particularly during the holiday season.
4. There’s Minimal Oversight
While credit cards are heavily regulated, typical BNPL services offered by large retailers have less oversight, which can mean fewer consumer protections. The Consumer Financial Protection Bureau has cautioned about BNPL risks. Even if the loan is interest-free, many BNPL providers charge late fees, and in some cases, unpaid balances may be sent to debt collectors.
Consider the Bigger Picture
BNPL might be convenient, but it’s essential to understand the full picture. With added fees and potential impacts on credit, typical BNPL options from large merchants may be worth a closer look. If you have questions about managing your holiday spending responsibly, we’re here to help with guidance tailored to your needs.
