Millennial Money: What to do if you buy now, can’t pay later

Jan 18, 2022, 5:00 AM | Updated: 7:25 am

Buy now, pay later” can be a convenient payment method. But if you don’t factor the recurring payments into your budget, it can get messy.

This is especially true if you’re juggling multiple buy now, pay later plans on top of other debts. The credit inquiries that some lenders conduct when you apply for any type of credit don’t always offer visibility into buy now, pay later plans you may hold with different companies, so it may be possible to bite off more than you can chew.

Equifax, one of the three major credit bureaus, is aiming to change that in the first quarter of 2022 by formalizing a process for including buy now, pay later information on credit reports.

“Part of the push here is to support responsible lending,” says Mark Luber, chief product officer for U.S. information solutions at Equifax. “When a company lends, they want to make sure the consumer can handle that new credit account and can in fact pay it back.”

An unpaid buy now, pay later balance could get sent to collections and potentially hurt your credit history. Late fees may also apply, depending on the company. And you could be barred from using the service temporarily or permanently.

Take action early to avoid these consequences and explore some options that can free up money to keep your finances on track.

1. SCAN YOUR FINANCES FOR OPPORTUNITIES

Revisit your budget (or create one) to understand where money is going. Consider adjustments on nonessential expenses.

“Do you need all of those subscription services you have now? Is there a way to get a cheaper cell phone plan or a cheaper cable plan or shop for cheaper insurance?” says Katie Bossler, quality assurance specialist at GreenPath, a nonprofit credit counseling agency.

Prioritize essentials like housing, food, utilities and medicine, and look for ways to save in other areas. Financial assistance with bills might be offered for those with income under a certain threshold.

2. PART WAYS WITH THE ITEM PURCHASED

It might be possible to return the item to the merchant for reimbursement. Some buy now, pay later companies don’t refund the money paid on interest, but you may come close to being made whole. Payments may still be due while the refund is pending.

If a merchant won’t accept a return, consider selling the item to recoup some of the money. You may find a buyer on social media marketplaces, apps or websites. Some online marketplaces may take a cut of the sale, so understand the terms before listing the item.

3. CHANGE YOUR DUE DATE OR PAYMENT METHOD

Before missing a payment, get in touch with the buy now, pay later company to explore options. Each company has different policies on whether you may extend the payment due date or change it.

Bossler recommends trying to align your due dates with the paycheck or pay period that offers you the most breathing room. If your plan requires biweekly payments, “it might be possible to switch to a monthly payment,” she says.

Or, if you originally used a debit card to set up the buy now, pay later plan, ask if you can switch the payment method to a credit card. You may incur interest with a credit card and will have to keep up with that bill, but it can buy some time if you’re worried about overdraft or late fees.

4. SEE IF YOU QUALIFY FOR FINANCIAL HARDSHIP

If your financial situation has changed because of circumstances beyond your control, like unemployment or a family emergency, the buy now, pay later company might provide financial hardship assistance.

Afterpay, for instance, can offer flexible payment timelines with no additional fees for eligible people experiencing hardship, according to a spokesperson for the company. But it’s important to contact the company for help.

5. GET A SIDE GIG

Taking on additional hours at work or earning supplemental income through a side job — driving for a rideshare or delivery service, for instance — may offer a way to pay off your buy now, pay later debt more quickly.

6. CONSOLIDATE OTHER DEBTS

Consolidation may not be ideal, or even permitted, for buy now, pay later plans, but consolidating high-interest debts elsewhere can free up money:

— With good credit (FICO scores of 690 or higher), you may qualify for a balance transfer credit card with a 0% intro APR, allowing you to move debt from a card with a higher APR. You’ll typically pay a fee — at least 3% of the amount transferred — but it might be worth it to save on interest for a year or more.

— For debt that will take longer to pay off, you could consider a low-interest personal loan. Factor in the cost of the origination fee and monthly payment to determine whether you’ll save money over time.

— A debt management plan with a nonprofit credit counseling agency may offer a way to consolidate credit card debt and other balances into one payment at a fixed rate. You’ll owe a fee, but the savings usually outweigh the cost.

________________________________________

This article was provided to The Associated Press by the personal finance website NerdWallet. Melissa Lambarena is a writer at NerdWallet. Email: mlambarena@nerdwallet.com. Twitter: @lissalambarena.

RELATED LINKS:

NerdWallet: What is debt consolidation and should I consolidate? https://bit.ly/nerdwallet-consolidate-debt

Consumer Financial Protection Bureau: What’s a credit inquiry? https://www.consumerfinance.gov/ask-cfpb/whats-a-credit-inquiry-en-1317/

USAGov: Help with bills https://www.usa.gov/help-with-bills

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

MSNBC appoints Alex Wagner as 4-night prime-time anchor

NEW YORK (AP) — MSNBC on Monday solidified its prime-time lineup by appointing Alex Wagner to fill Rachel Maddow’s time slot four nights a week, Tuesday through Friday. Wagner, who has worked at CBS News, as a co-host of Showtime’s “The Circus” and as an editor at The Atlantic, is on her second stint at […]
13 hours ago
Associated Press

Closing prices for crude oil, gold and other commodities

Benchmark U.S. crude oil for August delivery rose $1.95 to $109.57 a barrel Monday. Brent crude for August delivery rose $1.97 to $115.09 a barrel. Wholesale gasoline for July delivery fell 4 cents to $3.84 a gallon. July heating oil fell 13 cents to $4.23 a gallon. July natural gas rose 28 cents to $6.50 […]
13 hours ago
Associated Press

Credit Suisse fined for facilitating cocaine cash laundering

ZURICH (AP) — A Swiss court on Monday said it has fined Credit Suisse more than $2 million for failing to prevent money laundering linked to a Bulgarian criminal organization a decade-and-a-half ago. The court also ordered the confiscation of the equivalent of more than $12 million worth of deposits linked to the criminal group […]
13 hours ago
Associated Press

Feds seize websites after probe of pirated Latin music

ALEXANDRIA, Va. (AP) — Federal authorities have seized six websites that prosecutors say were illegally distributing copyrighted music to millions of users. The U.S. Attorney’s Office for the Eastern District of Virginia announced the seizures Monday of the websites that primarily targeted Latin music. According to an affidavit, agents began investigating the websites in April […]
13 hours ago
FILE - The North Lawn of the White House is seen from a newly reopened section of Pennsylvania Aven...
Associated Press

White House to resume its full tour schedule next month

WASHINGTON (AP) — Public tours of the White House will return to a full operating schedule next month, after nearly a year and a half of disruptions due to the coronavirus pandemic. Free tours of the executive mansion were suspended when President Joe Biden took office, as officials tightened virus protocols in line with guidance […]
13 hours ago
FILE - Houston Texans quarterback Deshaun Watson speaks during a news conference after an NFL footb...
Associated Press

Lawsuit: Texans ‘turned a blind eye’ to QB Watson’s actions

HOUSTON (AP) — The Houston Texans had been told that their former quarterback Deshaun Watson was sexually assaulting and harassing women during massage sessions, but instead of trying to stop him, the team provided him with resources to enable his actions and “turned a blind eye” to his behavior, according to a lawsuit filed Monday. […]
13 hours ago

Sponsored Articles

(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
...

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

ADHS mobile program brings COVID-19 vaccines and boosters to Arizonans

The Arizona Department of Health Services and partner agencies are providing even more widespread availability by making COVID-19 vaccines available in neighborhoods through trusted community partners.
Millennial Money: What to do if you buy now, can’t pay later