Daily Column – 26th October 2021

Actionable suggestions to help you improve your financial situation.

Because of a shortage of supplies, inflation, and fewer discounts, the holiday season is expected to be expensive. Additionally, you may be tempted to use a service that allows you to pay later for a purchase (also known as Buy Now Pay Later or BNPL) to make your spending more bearable by deferring payment. However, irrespective of time of year, it is wise to use BNPL just when it is advantageous to you, rather than always.

BNPL is an instalment plan that allows you to break down big transactions into a series of equal, no-interest, or low-interest payments spread out over a period of many months. Retailers are including the feature into their shopping carts because it encourages customers to spend more money—up to 45 percent more. Walmart, the largest retailer in the United States, discontinued layaway services for everything from the Atari to BNPL’s Nintendo 64 last month. In contrast to layaway, which requires the merchant to keep onto an item until it has been fully paid for, BNPL allows you to walk out with your items after only a minimal payment.

If any of the following apply to you, you should consider using BNPL’s resources:

Normally, you would purchase the following products outright: A 0 percent loan frees up your cash to be used for more productive endeavours, such as investing or prioritising payments to debt with a higher interest rate . It appears to be more of a pain than a benefit to do so, but it is a possibility.
You might be able to return something like: Consider the following scenario: you wish to purchase three pairs of Nike sneakers in different colours (don’t think why?!) , with the intention of returning the two that . Using BNPL prevents you from having to put hundreds of dollars more on your credit card, allowing you to maintain your credit utilisation controlled and maintaining a high credit score. Once again, a great deal of effort is required for a modest reward.
You require the goods and are unable to pay for it in full: you require, not desire. If you’re waiting for your next paycheck and are unable to pay for necessities such as food or diapers, BNPL may be able to help you avoid paying exorbitant credit card interest.
When should you stay away from BNPL?

You don’t require the item, and you are unable to pay for it entirely at this time.
You are not eligible for a 0 percent interest rate.
It’s possible that you’ll miss a payment.

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