Last year Apple discontinued its own take on “buy now, pay later” (BNPL), Apple Pay Later. The service may no longer be available in name, but BNPL purchases are readily available when you check out with Apple Pay. So, what exactly has changed about paying with installments via Apple Pay, and what sets it apart from other BNPL programs—for better or for worse?
Any personal finance writer with a semblance of a conscience will advise against making a habit of using these services. They’re helpful if you really need to finance something big, but whenever possible, it’s best to avoid taking on debt for everyday expenses.
How can you pay with installments using Apple Pay?
How to set up BNPL with Apple Pay
The setup process varies slightly depending on your BNPL provider:
Download the Klarna app and create an account.
In the Klarna app, look for the option to add to Apple Wallet.
For Affirm:
Get pre-qualified for spending limits, up to $30,000.
Use it like any other payment method in Apple Pay.
Download the Afterpay app and set up your account.
Afterpay should pop up directly at checkout when using Apple Pay.
Naturally, Apple users may be drawn to the convenience of a BNPL options during Apple Pay checkout. However, that convenience might just be the biggest risk. They can make it all too easy to spend more than you can actually afford. The Consumer Financial Protection Bureau released a report that shows BNPL users were more likely to have higher credit card debt, delinquencies on other credit products, and lower credit scores than nonusers.
The bottom line
Think about your current and future budget. When a bigger payment gets broken down into smaller installments, you might find yourself overspending in the long run because it "feels" like you can afford it. Stay on top of how much you’re actually spending, and how it will impact your overall budget going forward.
Keep an eye on your account balance. Klarna, Affirm, or an BNPL service are not credit cards. Even if Apple doesn’t charge fees for missed payments, your bank will still charge you overdraft fees. Plus, if you default on a BNPL loan, you’re at risk of damaging your credit score.
The most important thing is that you know what you're doing: Before you pay for anything with installments, be thoughtful about why you’re taking on this debt in the first place.
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