Holiday Shopping 2021: Beware of Buy Now, Pay Later Plans


A survey shows that popular installment payment programs trip a lot of consumers, potentially costing them more in the long run.

DALLAS – Are your Christmas presents floating on one of the many container ships saved off the coast of California? Or worse yet, sitting in Chinese factories where the lights have been turned off due to soaring coal prices? Or maybe your freebies are trapped in closed Vietnamese businesses crushing COVID-19 closures.

Supply chain collapses continue to cripple the world of commerce. For this reason, there has been a lot of advice that we should start shopping now for the holidays.

Study: Buyer Beware of “Buy Now, Pay Later” Offers

If you’re starting early, pick up the pace. Many stores make spending easier by rolling out “buy now, pay later” offers. But watch out for buyers: make sure you know everything about these offers. Also be aware that a recent Credit Karma survey shows that 34% of people participating in these deferred payment programs have missed one or more payments.

And 72% of those who have fallen behind believe their credit rating has gone down because of missed payments. It can mess you up financially for years if a defect like this shows up on your credit report.

Low credit scores in Texas

And our collective credit rating was not good to begin with. Experian says in its State of Credit 2021 report that in this state where everything is supposed to be bigger, our average credit score is almost the smallest in the country at 673. The report says the only states where consumers have average scores lower than those in Texas are Oklahoma, Alabama, Louisiana and Mississippi.

Also, before you start buying now and paying later, you should be aware that if your credit score is poor, it may increase your interest rate in some “buy now, pay later” programs.

Another important takeaway from the Experian report is the retail debt we owe Texas. On average, Texans charged $ 2,248, the best in the country, on store-specific payment cards, compared to the national average balance of $ 1,888.

So, to recap: we get incentives at the checkout to defer payment… or just put the balance on a charge card. While supply chain warnings rush you into holiday shopping early on, do so with great caution so you don’t find yourself in a financial bind.


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