Why Buy Now Pay Later (BNPL) is a problem

An unpaid BNPL balance might be sent to collections and then negatively affect credit history. Depending on your situation, they may also introduce late fees and block you from using BNPL temporarily or permanently.

buy now pay later bnpl
If you continuously rely on the Buy Now Pay Later (BNPL) method for your purchases, you might have to change your plans to survive 2022.

In this article

Though Buy Now Pay Later (BNPL) is a helpful payment method, purchasing too many items using this method will only lead to you incurring debt upon debt. Unlike other forms of credit, BNPL transactions do not appear on your credit report. Moreover, there is no restriction on how many times you can use this method as well. Hence, you may end up with unpayable bills later if you keep buying now endlessly.

Why BNPL is changing

However, that might change in 2022. Equifax may begin to include Buy Now Pay Later information on credit reports very soon. This will ensure that the lending company doesn’t overburden its consumers who already have payments to be made.

So that means an unpaid BNPL balance might be sent to collections and then negatively affect credit history. Depending on your situation, they may also introduce late fees and block you from using BNPL temporarily or permanently.

What can we do about it?

You can try strengthening your finances to complete BNPL transactions smoothly. Alternatively, you can go for Cash Now Pay Later (CNPL) by Line. Line gives you instant cash for your emergency needs and you can use the cash in any way you want. Pay for groceries, clear bills, repay dues, buy gas or even use it to get medicine, the uses are endless. Moreover, you can pay it back whenever there is an inflow of cash in your account. There is no interest fee, no credit checks and no income restrictions.

Budget

If you continuously rely on the BNPL method, you might have to change your plans to survive 2022. The ideal way is to start budgeting. It’s not a magical way to heal your financial situation nor a band-aid that will offer a temporary solution. It’s a slow and the best way to build and secure your financial future. If you don’t have a budget, this is the best time of the year to begin a healthy financial lifestyle. 

I have bought too many items. What should I do?

You can check if you could get a reimbursement if you return the product to the merchant. However, some BNPL companies may not refund the money paid on interest.

If your retailer does not accept a return, you can consider selling it online or on social media. Make sure to read the policies and conditions before selling online, as the platform might expect a certain percentage from the sale profit.

Due date and payment method

In case your due date is around the corner, and you are not in a position to make a payment, try to contact the BNPL company and check if they could extend the due date. Also, if you’re currently on a biweekly plan, check if you can change it to a monthly payment.

You can also consider changing the payment method. If you are worried about overdraft or late fees, you can change to a credit card that will incur interest. 

Financial hardship assistance 

If you cannot make the payment because of unemployment or a family emergency expense, check if the Buy Now Pay Later (BNPL) company would provide financial hardship assistance.

Side hustle

Working part-time or having a side gig will get you extra dollars to pay off your Buy Now Pay Later (BNPL) bills. Moreover, you can always consider working extra to improve your financial situation. There are several simple opportunities available today that can help you earn a lot of money.

Debt consolidation

Consolidation might not directly work for BNPL plans; however, consolidating your other high-interest debts may get you some money that can be used to pay BNPL payments.

If you have FICO scores of 690 or higher, you might be eligible for a balance transfer credit card with 0% intro APR. You will have to pay nearly 3% of the amount transferred as a fee. But that’s okay as you will save on interest for a year or more.

If you have debt that will take more time to pay off, you can try looking for a low-interest personal loan. You must, however, check the origination fee and monthly payment options and check if you’ll be able to save money.

A debt management plan could help you consolidate credit card debt and other debt into one payment at a fixed rate. The fee for these plans is usually nominal as they are from nonprofit credit counseling agencies. 

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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