Should You Try ‘Buy Now, Pay Later’ This Holiday Season?

Woman shopping at Christmas market.
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Holiday shoppers this year will be using a wide variety of payment methods to purchase holiday gifts. One widely discussed method is buy now, pay later. Some shoppers may be persuaded to try it out to ensure everyone on their holiday list gets gifts, but should you?

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Let’s look at what it means to try out buy now, pay later when holiday shopping. Plus, in the event you decide not to use buy now, pay later, we’ll share other popular payment options.

Buy Now, Pay Later: Advantages and Disadvantages

Buy now, pay later, often abbreviated as BNPL, is a form of short-term financing where you can make affordable installment payments over time on a large purchase instead of paying for the full amount up front. 

According to Forbes, BNPL payments can usually be spread out over the course of several months and are usually interest-free for those who make on-time and in-full payments. Other advantages to using BNPL include ease in qualifying for this type of financing and simplicity in getting started.

Make Your Money Work for You

There are also downsides to using BNPL. Shoppers will need to understand the terms and conditions before agreeing to using this form of financing. It’s also important to make payments on time or in full as late payments may have a negative impact on your credit score.

In some cases, BNPL may also encourage overspending. This can lead to consumers struggling to keep up with their payments and buying more items, especially expensive ones, through BNPL than they can actually afford. 

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Other Payment Method Options

What other payment method options are available if you decide not to use BNPL? The good news is there are several different ways to pay for holiday purchases beyond this popular form of financing.

Cash or Debit Card

In a GOBankingRates survey polling 1,025 Americans about their holiday shopping plans, more than 56% of respondents said they planned on using cash or debit cards to pay for their holiday spending this year. 

Make Your Money Work for You

Those who decide to use cash may try the cash-stuffing trend to pay for holiday gifts. This is a payment method where a certain amount of cash is designated to pay for gifts and helps shoppers better stay on track with their budgets and avoid overspending.

If you decide to shop using a debit card, remember your purchases will instantly come out of this designated account. Savvy shoppers need to use this card carefully and make sure the account has enough money in it to cover holiday purchases.

Credit Card

For 25% of GOBankingRates respondents, choosing a credit card is the way to go for paying for holiday gifts this year. 

Using a credit card can help shoppers earn extra rewards and points as they shop. Remember: the holiday season is not the time to max out your credit card(s) and end up in credit card debt. Do not charge more than you know you can pay off in full each month.

Make Your Money Work for You

Gift Cards

The unlikely hero of this year’s holiday season is the humble gift card. It’s the gift 54% of Americans request the most this year and one you can even use to pay for holiday purchases. 

According to the GOBankingRates survey, 6% of respondents plan on using gift cards as payment for holiday expenses. Take a moment to look through your existing stash of gift cards and see which ones you can use for holiday shopping purposes.

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Make Your Money Work for You

About the Author

Heather Taylor is a senior finance writer for GOBankingRates. She is also the head writer and brand mascot enthusiast for PopIcon, Advertising Week’s blog dedicated to brand mascots. She has been published on HelloGiggles, Business Insider, The Story Exchange, Brit + Co, Thrive Global, and more media outlets. 

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