(BPT) - You've probably wondered about it - various retailers and apps offering consumers the opportunity to "buy now and pay later." It's easy to confuse buy now pay later (BNPL) plans with using a credit card or layaway plan. While finances are tight for many, especially during and after the holidays, it's good to know what plans would work best for your situation, without getting you into financial difficulties down the road.
The credit card trap
When cash is in short supply, especially if you are a recent grad or if you're between jobs, it's all too easy to max out your credit cards when buying holiday gifts or necessary expenses, from gas for your car to medical bills.
But even if you have reasonably good credit and a generous credit limit on a card, relying too heavily on this payment method can lead to financial difficulties in the future. Even if your credit card charges interest that is not too high, any amount adds up over time, especially if you can't pay off the balance. And even worse - if you miss a payment, that can not only lead to fees but will also harm your credit score, making it hard to borrow later if you need a car or bank loan.
Especially for anyone still paying down student loans, the lure of credit cards has definitely lost its luster - which is a good thing, in the long run.
The old-fashioned layaway plan
In your parents' or grandparents' day, layaway was a common method for saving up for large expenses, like appliances. But the catch was, you couldn't take home the item until the total amount was paid off at the retailer.
It was a great way for people to save up for later purchases, making sure they didn't overextend their credit. But for today's financial challenges, a plan like this does not help much. The layaway plan has evolved to fit our current needs, and buy now, pay later has revolutionized the way we purchase - like getting the item right away instead of waiting to receive it once it's paid off.
How to buy now, pay later
Enter a new way to make purchases now and pay for it over time without exorbitant interest and fees later. For example, with Quadpay, you can make purchases without needing to go through a hard credit check that could affect your credit score. Their app divides your purchase into four payments over a six-week period, and withdrawals for each payment are set up to be automatically charged to the bank account you provide, so you won't have to worry about missing a payment - and there's no interest and no hidden fees. The first payment is made at the time of purchase.
With Quadpay, you can use buy now, pay later to shop anywhere, for anything - whether online or in-store. After downloading the app you can browse any store online or just add a Quadpay card to your digital wallet to conveniently pay in-store. The app even sends helpful reminders of upcoming payments via text message.
Using BNPL beyond gifts
Apart from buying others (or yourself) items you want, you can also use the Quadpay app to pay for medical bills, prescriptions, utilities and other necessary expenses - even parking tickets.
'We created Quadpay to provide consumers savvier ways to pay and greater access to financial flexibility, believing the traditional credit model was broken,' said Adam Ezra, Co-CEO of Quadpay. 'While a FICO score alone may make sense for car loan eligibility, we've proven it's not the case for smaller purchases.'
Another bonus? If you're shopping in-store, you can touch and go to pay with the app for safer, contactless shopping.
Tips for using buy now, pay later
1. Download the Quadpay app, and make sure you've added a Quadpay card to your digital wallet, for easy tap-to-pay in-store capabilities through your digital wallet.
2. When shopping online, purchase goods from any retailer through the Quadpay app to easily split payments.
3. Keep track of how much you're spending and how it's being divided over the next six weeks, so you're not overreaching your expected income during that period.
Using buy now, pay later, you can spread out payments over time to help you manage your finances smartly when money is tight, and avoid being late on crucial payments when you're between paychecks.