That ‘Too Good to Be True’ Deal Might Be Exactly That
Prime Day is here, and the deals are calling your name. From that new 4K TV to the air fryer you’ve been eyeing, the temptation to splurge is real. Making it even more tempting is the seemingly magical option at checkout: ‘Buy Now, Pay Later’ (BNPL). Services like Klarna, Afterpay, and Affirm promise you can get your haul now and pay for it in small, interest-free installments. What’s not to love?
Well, quite a lot, actually. Before you click that button and split your purchase into four ‘easy’ payments, it’s crucial to understand the hidden risks. What seems like a convenient financial hack can quickly turn into a costly trap. Here are four major reasons to think twice before using BNPL for your Prime Day purchases.
1. The Psychological Trick That Leads to Overspending
BNPL services are masters of psychology. Seeing a payment of ‘$25 today’ instead of ‘$100’ for a new gadget significantly lowers your mental barrier to spending. It makes expensive items feel deceptively affordable, encouraging impulse buys you might not otherwise make. It’s easy to lose track when you have multiple small payment plans running simultaneously. What starts as one ‘easy’ payment plan can quickly multiply, leaving you with a mountain of small debts that add up to one big financial headache.
2. The Sting of Hidden Late Fees and Interest
The ‘interest-free’ promise is the biggest draw of BNPL, but it’s often conditional. That condition is perfect, on-time payments. If you miss a payment, even by a day, you can be hit with hefty late fees. These fees can sometimes be more punishing than the interest on a traditional credit card for a small balance. Worse yet, some plans can convert your entire ‘interest-free’ purchase into a loan with a high-interest rate, retroactively applying it to your balance. The easy sign-up process often glosses over the fine print where these penalties are hiding.
3. The Unexpected Damage to Your Credit Score
“It won’t affect my credit score” is a common and dangerous misconception about BNPL. While many services start with a ‘soft’ credit inquiry that doesn’t impact your score, that’s not the whole story. If you miss payments, the BNPL provider can—and often will—report this delinquency to the major credit bureaus. A single reported late payment can cause your credit score to drop significantly. Furthermore, having multiple short-term loans open at once can be viewed as a sign of financial instability by lenders when you later apply for a mortgage, car loan, or even a traditional credit card.
4. The Nightmare of Returns and Refunds
Think returning an item is as simple as sending it back to Amazon? Not when a BNPL service is involved. Using a third-party lender adds a complicated layer to the returns process. You now have to deal with two separate companies. You might get your refund processed by Amazon, but you may still be on the hook for payments to the BNPL company until their systems catch up. This can lead to immense frustration, confusion, and even accidental late fees as you try to sort out who owes what. A simple return can become a logistical nightmare.
The Smart Way to Shop on Prime Day
The allure of Prime Day deals is strong, but financing them with BNPL is a gamble with your financial health. The best strategy is the oldest one: if you can’t afford to buy it outright with cash or a debit card, you might want to wait. If you do use a credit card, have a firm plan to pay off the balance in full before interest accrues. Shop smart, not just cheap—your future self will thank you.