Senate Cents: A Financial Wellness Blog

BNPL may be everywhere—but is it the right choice for your finances?

Buy Now, Pay Later (BNPL) services like Klarna, Affirm, Afterpay, and others are now integrated into thousands of retail checkout pages—from clothing stores to travel sites. These services make it easier than ever to spread the cost of a purchase over multiple payments. And during the summer months, when expenses like vacations, concerts, or home upgrades pop up, BNPL might seem like the perfect solution.

But before you click “Pay Later,” it’s important to understand how BNPL works—and the potential risks that could cost you more in the long run.

The Appeal of BNPL

BNPL services offer:

• The ability to split purchases into equal payments over time
• Access to flexible, sometimes interest-free plans
• A fast checkout option that doesn’t require applying for a new credit line

At first glance, BNPL seems like a convenient, low-stress way to shop. But beneath the surface, there are important details to consider before making it your go-to payment method.

The Real Risks Behind BNPL

1. Overspending and Debt Accumulation
BNPL makes purchases feel smaller and more manageable, which can lead to impulse spending. It’s easy to lose track of how many installment plans you’ve opened—especially when using multiple apps. The result? More debt than you expected, and a budget that’s quickly off track.

2. Late Fees and High Interest Rates
While many BNPL plans promote “no interest,” this often only applies to short-term offers. For longer repayment periods, some providers charge interest rates as high as 35.99% APR¹. For example, Affirm, one of the most popular BNPL services, offers plans with APRs up to 36%², depending on your credit and the merchant. These rates rival or even exceed many credit cards and personal loans.

3. Negative Impact on Your Credit
BNPL services don’t always report to credit bureaus—but when they do, it's often only if you miss payments. That means you’re not building credit through on-time payments, but you are risking damage to your score if a payment slips through the cracks.

4. Limited Purchase Protection
Unlike credit cards, BNPL services may not provide strong consumer protections. If an item arrives damaged, is never delivered, or you have a dispute with the seller, you may have fewer options to recover your money.

5. Return and Refund Hassles
Returning a product purchased through BNPL can be complicated. You may still be on the hook for ongoing payments while waiting for the refund process to play out, and every provider handles this differently.

6. Hidden Fees and Fine Print
BNPL terms aren’t always transparent. Some services include service fees, account setup charges, or hidden penalties buried deep in the fine print. Always read the terms before committing.

7. Overdraft Risk When Linked to Debit Cards
If your BNPL account is tied to your debit card and your balance is low, automatic payments can result in overdrafts—triggering bank fees and additional financial headaches.

8. No Long-Term Credit Benefit
Even if you’re making every payment on time, most BNPL providers don’t report positive activity to credit bureaus. So you’re not building your credit history, even with responsible usage.

9. Psychological Pressure to Spend
BNPL is built around convenience—and that can encourage overspending. The “buy now, worry later” mindset may feel good in the moment but can create long-term stress and financial strain.

Smarter Alternatives for USSFCU Members

If you're considering BNPL to help make your summer more affordable, USSFCU offers safer, more transparent solutions designed with your long-term financial wellness in mind.

Personal Loan

For larger purchases or unexpected summer costs, a USSFCU Personal Loan gives you:

• Fixed interest rates (far lower than the 35.99% APR charged by some BNPL services)
• Predictable monthly payments
• A clear payoff timeline
• The opportunity to build your credit with on-time payments

Whether you're planning a vacation, tackling a backyard upgrade, or consolidating higher-interest debt, a personal loan offers a responsible, transparent alternative to Buy Now, Pay Later.

Explore our current personal loan rates and apply online

Smart Rewards Visa® Credit Card

Earn points on every purchase, manage your spending with ease, and enjoy built-in protections—all with the option to pay overtime or in full.

• No annual fee
• Real-time spending alerts
• Bonus rewards during seasonal promotions

Check out our current credit card interest rates.

Before You Tap “Pay Later,” Take a Step Back

BNPL may seem like the easy, breezy way to pay—but the hidden costs, credit risks, and lack of consumer protection can take the fun out of your summer. At USSFCU, we offer flexible lending options with fewer surprises and more peace of mind—so you can enjoy the season and stay on track with your financial goals.

Have questions about financing your summer plans the smart way?

Visit ussfcu.org/loans or connect with one of our lending experts today.

Article content is provided for information purposes only. APR= Annual Percentage Rate. All loans are subject to credit approval. Rates and/or credit limits are based on creditworthiness, income, and debts. Not all applicants will qualify.

¹ klarna.com | ² Affirm.com