Why you should reconsider using buy now, pay later loans
If you have an ongoing subscription service, the easiest way to pay is to set up an autopay plan. If you’re worried about late fees and interest, autopay is one way to avoid those penalties.
While you may be tempted to spread autopayment plans around, some recurring charges are better off being paid as you go. For example, an annual fee may cost less per month than a monthly charge, but it could hit you hard when that annual payment comes due. Tap or click here for five bills you should never put on autopay.
Buy now, pay later loans let you split the cost of purchases into equal payments, then pay it off on a schedule. While you usually don’t have to deal with credit checks and traditional loan agreements, there are drawbacks to these payment plans.
The good and the bad
In December, we reported the potential dangers of buy now, pay later services. You’ll often see plans consisting of four installments paid weekly, bi-weekly or monthly with a minimum purchase price.
These plans help ease the financial stress of paying for a product all at once. It sounds good, but one problem is the temptation to buy more than you can afford. Smaller payment increments can add up faster than you realize.
You also have to watch out for hidden fees. While you may not pay interest in the first payment, you may have to do so down the line. A fixed cost sounds good, but the price may be higher by the end of the plan than it would have been if you had bought the product in one payment.
Fees and increments can skyrocket up to 30%, and late payments can put a real hit on your wallet.
The BNPL boom
There’s a new development in the BNPL world. These transactions are now showing up on your credit report. In December, Equifax announced that it would be including BNPL payment information on credit reports starting in the first quarter of 2022.
In January, Experian announced its upcoming Buy Now Pay Later Bureau, which will debut this spring. In February, Transunion announced point-of-sale solutions that let consumers add BNPL to their credit files.
These companies tout the benefit of having BNPL included in your credit history. For one, it can help to build credit. Paying off these loans on time will benefit younger buyers and people with bad credit, as it provides credit-strengthening opportunities they usually couldn’t afford.
The one thing that can impact your credit score you never thought of until now
Having good credit can open a lot of avenues for you. In most cases, you can be offered better interest rates, pay lower financial charges on credit cards, or qualify for a bigger loan. Tap or click here to check your credit report for free — and what you need to look for.
How to run a comprehensive background check on yourself
With the relative ease of finding information about anyone via the internet, search engines and social media, sleuthing around is now par for the course. But it goes deeper than that. Every institution that you plan on dealing with wants to glean your history, whether you want it or not.
5 things to consider before closing a credit card account
Like many of us, you’ve probably been doing a lot of excess online shopping while stuck at home. It might be time to limit your purchasing, and you can do that by closing some of your credit cards.
But it’s not as simple as just cutting up the cards. You need to properly close a credit card account down to keep it from negatively affecting your credit score — which can happen anyway if you’re not careful with which cards you close.