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Buy now, pay later programs.


The noise-cancelling wireless earbuds you’ve wanted for a while are finally on sale. You’re about to checkout online when you notice two totals: the first, $174.99, and the second, 4 interest-free payments of $43.75 (may be rounded up or down based on the plan).

Though you’ve been saving up for a while, you can appreciate not having to pay the total amount right away. So you go for it. This is what’s called “buy now, pay later”, or BNPL for short.



What’s BNPL?

A BNPL plan is a way to purchase items and services without paying for them in full upfront. There are a number of payment models available for these plans, but we’ll be focusing on plans that allow you to make 4 equal, regular, interest-free payments over a short period. These plans usually don’t require a credit check and are available at some of your favourite retailers.


How do BNPL plans at online retailers work?

Typically, retailers partner with a BNPL provider that processes payments on your credit or debit card. Here’s an example of what you might expect when signing up for a plan, though it may vary depending on the provider:



Add item to checkout.



Select the BNPL provider, usually listed under the estimated cart total.



You’ll then be taken to the provider’s website to fill out some basic information, as well as the account you wish to make pre-authorized payments from. You can usually choose a debit or credit card account. If you’ve used the app before, you may be able to skip this step.



You’ll then be taken back to the online store to complete your transaction.



The first payment will be processed right away, and the remaining three would typically be processed every two weeks.


Not just for pricey stuff.

BNPL programs have gained popularity over the last few years. They’re so common, you can purchase a $50 face cream (tax included) in 4 instalments of $12.50 at a luxury beauty retailer. And it’s often as easy as checking a box while you’re checking out online.


Buy Now, Pay Later

  • Often a short-term, typically interest-free loan offered in partnership with retailers and lenders.

  • Purchases are typically spread over 4 equal payments within a 2- to 4-week timeframe. Although interest-free, you can incur charges if you miss any payments (payments are usually charged to the credit or debit account you provide at the time of checkout from the lender).

  • There’s typically no credit check required. When you select the “buy now, pay later” option at checkout, you’ll be asked a few basic questions about yourself, although you may be able to skip the Q&A if you’re already registered with the BNPL lender.

  • Generally doesn’t impact your credit score.

Credit Card

  • A form of payment that allows you to buy things today and pay for them tomorrow.

  • Most banks offer a grace period where you won’t be charged interest on new credit card purchases – so long as you pay off your full balance before the payment due date on your statement. You’re only charged interest on any unpaid balance after the interest-free grace period. But if you make your payments in full, you won’t be charged interest.

  • Requires a credit check as part of the application process so lenders can understand your credit behaviour. Need to build or rebuild your credit? A secured credit card might be a good option for you!

  • Credit card issuers like Capital One report your account activity to credit reporting agencies every month, allowing you to build your credit history.


BNPL plans are attractive because they’re an alternative option for those who can’t access credit, and they make mid- to high-priced goods accessible. But that flexibility and accessibility comes with a price. If you’re someone who can’t resist an impulse buy, these programs can make those purchases even harder to resist. Before opting in, be sure you can cover the funds for the item you’re interested in buying in the short-term. Plus, try to avoid multiple BNPL purchases around the same time. The low payment structure can put you in a spending trap, potentially putting your long-term financial goals at risk.


Interested in learning about payday loans? Check out this article.