6 Costco Spending Traps To Avoid If You Use Buy Now, Pay Later

Marvin Samuel Tolentino Pineda / iStock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

Costco has teamed up with Affirm to offer Buy Now, Pay Later (BNPL) for online purchases. This new partnership with Affirm gives customers the option to split purchases of $500 or more into manageable payments over time.

While this may sound like an ideal option for stocking up or snagging that big-ticket item, it can quickly turn into a budget nightmare if you’re not careful.

BNPL might make your cart feel lighter at the moment, but the monthly payments (plus interest, depending on your terms) can pile up fast. And at a place like Costco where the portions are large and the temptation is even bigger, this can easily turn into a slippery slope.

Here are seven common spending traps to avoid if you’re using BNPL at Costco.

1. Financing Your Groceries and Household Items

Let’s start with the big one: Groceries. Costco sells some of the best bulk deals around. But using BNPL for your large grocery and household items haul is a recipe for disaster.

Interest rates with Affirm range from 10% to 36%. Payment plans also range from three to 36 months so you could be paying on your purchase for a while. Meanwhile, your family will need more food and when it’s time to restock all your household items, you’ll be faced with the choice of enrolling in another BNPL plan.

It’s best to avoid even starting this cycle especially if you’re not looking to pay for items that your family has already eaten a long time ago.

2. Kitchen Remodel Items

Costco sells a variety of kitchen renovation items online, including flooring, light fixtures and windows. Using BNPL for these can make higher-end materials seem affordable due to manageable monthly payments. However, this can lead to overspending and exceeding your renovation budget.

Instead, try this:

• Set a realistic budget: Determine how much you can afford to spend on your kitchen remodel and stick to it.
• Prioritize needs over wants: Focus on essential upgrades first, and consider postponing non-essential enhancements.
• Save before you spend: Consider saving up for your renovation to avoid financing costs altogether.

3. Buying That Gigantic Backyard Playset on a Whim

Costco has a way of surprising you with things you didn’t even know you wanted. Case in point: that $1,200 cedar swing set with a built-in rock wall. It looks amazing, and with BNPL, the payments might feel painless.

But if it wasn’t in the budget before you walked in (or logged on), it’s probably not something you should finance. Impulse purchases lose their appeal fast when you’re still paying them off a year later.

4. The Lure of the Latest OLED Smart TVs

High-end OLED smart TVs at Costco can cost several thousand dollars. BNPL can make these seem affordable with low monthly payments, but the total cost, including interest, can be significant. Assess whether such a purchase is necessary and fits within your budget before proceeding.

5. Financing Furniture and Home Decor

Costco’s furniture section can make you want to redecorate your whole home in one go. With BNPL, that $799 sectional or $1,100 bedroom set might seem totally doable.

But unless you’ve planned for it, and have the space in your budget to pay it off quickly, this can derail your financial goals. Instead, consider waiting for major sales or saving up first. It’ll feel a lot better knowing it’s fully paid for.

6. Upgrading Multiple Appliances at Once

Costco offers competitive prices on appliances, making it tempting to upgrade multiple items simultaneously. However, financing several appliances at once can lead to high monthly payments and increased interest costs. It’s wiser to replace appliances as needed and budget for each purchase individually.

The Bottom Line

Costco’s BNPL option with Affirm offers flexibility for managing large purchases. However, it’s important to use this feature cautiously. Reserve BNPL for planned, essential purchases, and avoid using it for routine expenses or impulse buys. 

Also, make sure you understand the terms and ensure that the monthly payments fit within your budget.

Share This Article: