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what is buy-now-pay-later?

Buy Now, Pay Later services provides the option to buy things in instalments, sometimes without paying anything up front at all. You'll often find these services, like Clearpay and Klarna at the checkout page of your favourite online shop. The BNPL provider you use will determine how many instalments you need to pay and how often you'll pay them. Instalments are a little like standing orders; payment is automatically taken from your card. So you don't need to worry about manually making payments on specific dates, but you do need to make sure you have enough money in your account to cover the payment.

how do they make money?

it's kinda sneaky

1. transaction fees

Providers charge a transaction fee to the retailer for every purchase made using BNPL. Some sneaky psychology: shoppers are more likely to buy more if they don't need to pay the full price upfront. So more stuff is bought when retailers use BNPL, resulting in better business for the retailer and more transaction fees for the BNPL provider.

2. late fees and interest

Depending on the service provider the real cost of using BNPL will vary. If you miss a payment, for example, you can expect to pay a late fee that generally ranges between £25 to £50. Some providers don't charge interest under any circumstances, while some offer an interest-free period and others charge interest rates between 0% and 29.95% APR.

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of using buy-now-pay-later

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of using buy-now-pay-later

there's more in the Good With app
things to consider beforehand
Buy Now, Pay Later is essentially just a strange form of credit, minus the credit-boosting perks. You could also see it as another form of debt, since you still have to pay the full price eventually. Make sure you understand what you’re agreeing to, know how and when you’re going to pay it back, keep track of what you owe so you're not assuming you have more than your bank balance says, and stay on top of your repayments. It's healthy to treat yourself, but make sure you're not gaslighting yourself into thinking you have more cash to spend.

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