ROCHESTER, N.Y. — Buy Now, Pay Later (BNPL) services can be appealing if you pay off your item in four to six installments. However, the risk lies in the bi-weekly payment schedule, which can lead to unexpected costs if you miss a payment.

The simplicity of BNPL is part of its allure. With no credit check and just a few clicks, it’s easy to use. Many consumers find themselves overwhelmed by multiple BNPL loans, often for numerous small purchases rather than one large item. The bi-weekly payments make it easy to lose track, and missing a payment can result in fees as high as 25% of the purchase price.

Moreover, these companies can report missed payments to credit bureaus. Experts warn that a single missed BNPL payment can lower your credit score by 30 points. Consumer Reports advises using these services with caution.

Lisa, a consumer expert, highlights the potential pitfalls.

“I think it’s important to be aware that the companies offer really short-term loans for free or what looks like to be free. They’re trying to draw you in and help you become a customer. And then they will offer longer-term loans, and they all have interest rates. There’s no way around it.”

Interest rates on longer-term BNPL loans can reach up to 35%, which is higher than many credit cards. Another significant issue is returns. If you return an item, you must get a refund from the BNPL service, which can be a lengthy and difficult process. This may result in continued payments for a product you no longer possess, just to avoid being reported to credit bureaus.

BNPL services are becoming increasingly common, but they aren’t regulated like banks or other financial services. Some consumers report unclear fee structures and interest rates. Used wisely, BNPL can help stretch your budget. However, overuse can lead to financial trouble and credit damage.

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