7 On Your Side looks at the pros and cons of Buy Now Pay Later

NEW YORK (WABC) -- During the pandemic - we used our credit cards a lot less.

Fearful of racking up debt, consumers have embraced a new payment process called Buy Now Pay Later or BNPL.

But is it a boost or a bust?

This online mode of paying off purchases has grown more than 80% since last year boasting more than 45 million users, mostly millennials and Gen Xers.

Buy Now Pay Later is primarily for online purchases. But instead of paying the merchant for a purchase, the BNPL provider pays the retailer for you. And then you pay back the BNPL provider over a few weeks or months, whatever the pre-set repayment schedule says.

Generally, you pay back in 2 to 4 installments that are taken directly from your debit card.

One of the big pros, unlike credit cards, is that it is usually interest and fee-free.

Some of the major players are companies like Klarna and Affirm are leading players and household names like American Express and PayPal are offering the service.

For example, PayPal Pay allows for payment in three installments over two months. That means if you buy a series 6 Apple Watch for $360, you'll pay $120 at the point of sale, $120 30 days later, and the balance a month later, two months after purchase.

One more pro is that it is much easier to get approved for this type of financing even with a low credit score.

Some big takeaways: One potential downside is BNPL purchases miss out on rewards points and cashback that credit cards offer.

If you sign up it's important to understand the repayment terms. Some plans come with late fees if you don't pay on time.

And consider return policies and how and how BNPL may affect your ability to return something once you buy.

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