Americans love buy-now, pay-later loans. But do these plans come with strings attached? : Planet Money : NPR

Courtesy of Amelia Schmarzo

Courtesy of Amelia Schmarzo

When Amelia Schmarzo’s father got her a credit card to use during college, he told her it should only be used for necessities and emergencies. Amelia barely touched the card… until she discovered a new payment method called buy now, pay later.

The pitch was simple: Buy whatever you want now and pay it off in four interest-free installments. Suddenly, Amelia was buying everything on a buy now, pay later basis. She didn’t notice that her small installments were quickly piling up. After just one month, her credit card was maxed out.

Buy now, pay later companies such as Klarna, Afterpay and Affirm have taken the country by storm since the pandemic sparked a boom in online shopping. But giving customers the option to pay for anything from clothes to dental surgery in interest-free instalments sounds too good to be true, right?

Today on the show, we talk about what buy now, pay later is and should we be worried about it?

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