Prime Day shoppers warned of buy now, pay later risks

As Amazon Prime Day approaches, consumer advocates are urging shoppers to be cautious with buy now, pay later plans. While the payment option can spread out costs with no interest or fees if payments are made on time, missed payments can lead to added costs and other financial headaches.

Action 9 attorney Jason Stoogenke reports that one in six adults have used that payment method in the last year.

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Consumers look for ways to stretch their budgets, so many turn to BNPL. The problem is you can get over your head easily, Consumer Reports said.

“The big concern is while these loans may help you cover something today, the payments are coming out of future paychecks,” said Lisa Gill with Consumer Reports. “And if you have several of these plans running at the same time, payments quickly add up.”

Consumer Reports says shoppers using buy now, pay later plans should watch out for a few common pitfalls:

• Overspending: Smaller payments can make expensive purchases seem more affordable than they are.
• Missed payments: Late payments can trigger fees and may hurt your credit.
• Return headaches: Refunds can take time, and you may still owe payments while a return is being processed.
• Too many loans: Juggling multiple buy now, pay later plans can make it harder to track what you owe.
• Limited protections: Some plans may not offer the same consumer protections as credit cards.

Consumer Reports’ advice: Only use buy now, pay later if you’re confident you can make the payments on time, and keep track of all repayment dates.

You should also:

• Beware of interest and fees.
• Ensure you can afford the payments later, not just now.
• Keep track of due dates, stacking multiple loans, and automatic payments that could overdraw your account.

For bigger buys, you may even want to compare the pros and cons of going with a credit card or even a bank loan.

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