“Buy now, pay later” is a type of payment plan that has become more popular over the past few years, especially as more people shopped online during the pandemic.
Known as BNPL for short, these plans divide your payment into a series of smaller, equal installments, usually with no interest and minimal fees.
Plans can be used online and in stores, depending on the app. Some retailers will even offer multiple plans to choose from during checkout.
Here are five BNPL apps you can use at major retailers, plus alternatives to consider.
1. Afterpay: Best for no credit check
Unlike most BNPL providers, Afterpay doesn’t interact with the credit bureaus. The lender will not conduct a soft credit pull on your application or report on-time or missed payments to the bureaus.
If you’re struggling to get approved for a credit card or loan because of a low credit score or minimal credit history, Afterpay may be a good option for financing a necessary purchase.
Where it’s offered: Afterpay partners with over 23,000 U.S. retailers, including Bed Bath & Beyond, Old Navy, Ulta Beauty and Lululemon.
How to get approved: Afterpay bases approval on whether there are sufficient funds on your debit or credit card, how long you’ve been using Afterpay, the purchase price and whether you have other outstanding loans with Afterpay.
Payment schedule: Afterpay uses the pay-in-four model. Your purchase will be divided into four equal payments, with the first due at checkout and the remaining three payments due two weeks apart.
Interest and late fee: Afterpay doesn’t charge interest. It charges a late fee of up to $8 if a payment is missed by 10 days.
2. Affirm: Best for large purchases
Affirm operates as a more traditional loan product. It offers longer terms and negotiates the interest rate with each retailer. If you’re looking to fund a larger purchase, like a mattress or computer, an Affirm loan may have more affordable payments spread out over a longer period.
Where it’s offered: Affirm partners with over 29,000 retailers in the U.S., including Amazon, Walmart, Nordstrom, Nike and Best Buy.
How to get approved: Affirm may perform a soft credit check, which doesn’t hurt your credit. It will also consider prior payment history with Affirm, how long you’ve had an Affirm account and the retailer’s available interest rate.
Payment schedule: Affirm offers three-, six- and 12-month repayment plans. Shorter plans of one to two months and longer plans of 48 months could be available depending on the purchase.
Interest and late fee: Interest rates on Affirm loans range from 0% to 30%. It doesn’t charge a late fee for missed payments.
3. Klarna: Best for earning rewards
Klarna offers three payment plans, including the popular pay-in-four model, its Pay in 30 model and a monthly financing option. After downloading the mobile app, users can join Vibe — a free rewards program with access to exclusive sales. The program awards one vibe per dollar spent, and vibes can be turned into rewards, like gift cards.
Where it’s offered: Klarna is available at retailers like Macy’s, Etsy, Foot Locker and Sephora. You can also generate a single-use Klarna virtual card, which can be used online at any U.S. retailer, including those that don’t partner with Klarna.
How to get approved: Klarna will conduct a soft credit pull. Approval decisions are based on available funds in your bank account, your history with Klarna and the purchase amount.
Payment schedule: Klarna’s Pay in 4 splits a purchase into four equal installments to be paid every two weeks, with the first due at checkout. The Pay in 30 gives shoppers 30 days after the item has shipped to pay for a purchase. Klarna also has a monthly financing option with terms up to 36 months.
Interest and late fees: Pay in 4 and Pay in 30 are interest-free. Klarna will charge a late fee up to $7 for missed payments for the Pay in 4. For monthly financing, Klarna will charge 0% to 24.99% interest and up to $35 for missed payments.
4. Zip (formerly Quadpay): Best for wide availability
Zip, formerly known as Quadpay, is available anywhere Visa is accepted. After downloading the mobile app, you can pay with your debit or credit card or generate a virtual Zip card that can be used in stores.
Where it’s offered: Zip is available at many retailers, including Walmart, Target, Home Depot, Sephora and more.
How to get approved: Zip doesn’t publicly share how it approves customers. It will likely depend on whether there are sufficient funds available on your debit or credit card, your history with Zip and the purchase price. It may conduct a soft credit pull.
Payment schedule: Zip uses the pay-in-four model. A purchase will be split into four equal installments to be paid every two weeks, with the first due at checkout.
Interest and late fee: Zip charges a $1 convenience fee for each payment, which is essentially interest. This means your total purchase will cost an extra $4. Late fees can be $5, $7 or $10, depending on your state.
5. PayPal Pay in 4: Best for peace of mind
PayPal offers a BNPL payment plan to users who have a PayPal account and are in good standing. Along with the name recognition that may put new BNPL users at ease, the company extends its PayPal Purchase Protection to its BNPL plan. That means if you don’t receive your item or it’s different from the description, you may qualify for reimbursement from PayPal.
Where it’s offered: PayPal’s Pay in 4 plan isn’t available for in-store use. It can be used online or through PayPal’s mobile app at retailers like Best Buy, Target and Bed Bath & Beyond.
How to get approved: PayPal may run a soft credit check. Approval is based on your application, your account history with PayPal and information provided by the credit bureaus.
Payment schedule: PayPal follows the pay-in-four model. A purchase will be divided into four equal installments due two weeks apart, with the first payment due at checkout.
Interest and late fee: PayPal doesn’t charge interest or late fees.
Should you use a buy now, pay later app?
NerdWallet recommends paying for nonessential purchases with cash whenever possible. Though BNPL may seem like a convenient payment option, it’s still a form of debt.
Consider these pros and cons when deciding whether to apply for a pay-later offer.
No interest financing: Most BNPL apps charge zero interest. That means if you make all payments on time, you use the service for free. It’s rare to be able to finance a purchase, especially a bigger ticket item like a computer, at zero interest.
Soft credit check only: Unlike applying for a credit card or loan, most BNPL apps will not conduct a hard credit pull, which can temporarily lower your score. Also, if you’re worried about a low credit score, you’ll likely have an easier time getting approved by a BNPL app than a traditional lender.
Simple, convenient and fast financing option: BNPL apps pride themselves on the simplicity and ease of their payment plans. Often integrated directly into the checkout process, applications are short and approval decisions are instantaneous, so you can opt into a BNPL payment plan within minutes.
May not be able to build credit: Most BNPL companies don’t report on-time payments to the three main credit bureaus, so you may not be able to build credit by using these plans. Some apps still report late payments, so in some situations, using BNPL can only hurt your credit score.
Late fees: Though most BNPL apps won’t charge a prepayment fee for paying off your loan early, many charge a late fee for missed payments. These fees can represent a significant percentage of the total and increase the cost of your purchase.
Could encourage overspending: BNPL plans can make it feel like you’re spending less than you are. For example, if your budget for a purchase is $100 and you opt into a pay-in-four plan, you’ll only pay $25 upfront. For some shoppers, it may be tempting to go back and fill up their cart with more items.
Alternatives to buy now, pay later
Though buy now, pay later can provide a simple and convenient way to cover a purchase, it doesn’t offer the same perks as other financing methods. You may want to consider these alternatives.
0% interest credit card: If you have good or excellent credit (a FICO score of 690 or above), you could qualify for a 0% APR credit card, which charges zero interest during the card’s introductory period — usually 15 to 21 months. Credit card companies will report payments to the bureaus, which may help build your score. You may also receive a sign-up bonus or access to a rewards program.
Small personal loan: If you want a longer repayment period, a small personal loan could be a smart choice. Loans are available for borrowers across the credit spectrum, and like credit cards, you can show a history of on-time payments to the bureaus. You’ll pay interest on a personal loan, but with longer terms, the monthly payment may fit more comfortably in your budget.