Buy now, pay later services surge in popularity, but financial advisor urges caution

Most online outlets have been offering multiple buy now, pay later options.

And how beneficial is it for your budget?

Services like Affirm, Klarna, PayPal, Sezzle and others allow you to make big purchases and spread your payments over installments bi-weekly.

They have become very popular. So much so, Ohio Sen. Sherrod Brown and other Democrats sent a letter to the Senate on paying closer attention to these services.

It states that this year in November, $8.3 billion was spent online with buy now, pay later companies — 17 percent more than last year.

So, it’s important to keep an eye on how to utilize them.

“The things that people need to be really careful of are the fees, and it can allow people to overextend themselves financially if they’re not cautious,” said Steve Waters, financial advisor, Raymond James-Wheeling.

If there are no fees or interest rates, Water says they are a fine idea.

“But the thing that you miss out on for things like that would be points, so that’s available with a credit card,” he said.

It all depends on what your budget is. If you are in a position to use a credit card and pay it off at the end of the month, getting the points would be more beneficial.

“If you know that you are running a little tight and need a couple more paychecks in order to be able to pay something off, you can use it,” he said.

Because, Waters says, you don’t want to get caught paying the high interest rate credit cards have if you can’t pay it off at the end of the month.

“I think one of the biggest financial mistakes you can make is paying those high interest rates,” he said.

But again, you should be aware of overspending and overextending your finances.

“If you can’t afford to make the payment, you can’t afford to make the purchase,” Waters said.