Buy now, pay later apps let you spread out the cost of a purchase over a few weeks, months or years, depending on the plan you choose. Most apps offer a “Pay in 4” plan that spans six weeks and doesn’t charge interest or fees. Longer terms may also be available, but these typically come with interest charges. If you’re looking to finance a big purchase, read on to learn how BNPL apps work and get recommendations for the best ones.
— Best Overall BNPL App: Afterpay
— Best for No Credit Check: Splitit
— Best for Large Purchases: PayPal Pay in 4
— Best for Small Purchases: Klarna
— Best for No Fees: Affirm
[Read: Best Personal Loans.]
What are Buy Now, Pay Later Apps?
BNPL apps let you purchase an item right away while paying it off over time, usually in biweekly or monthly installments.
“BNPL allows you to split your purchase into smaller, more manageable installments,” says Bruce McClary, senior vice president of membership and media relations at the National Foundation for Credit Counseling. “The approval process for BNPL apps is often quicker and easier than traditional loans or credit cards, sometimes even bypassing a hard credit check.”
Most BNPL apps offer a “Pay in 4” plan, which involves a 25% upfront payment and three more payments every two weeks after that. This six-week plan usually doesn’t come with interest or fees, as long as you make your payments on time. Longer plans that span several months or years may also be available, but these typically come with interest rates up to 36%.
You can sign up for a specific BNPL service and shop through its website, app or, if available, virtual card. Alternatively, some retailers let you choose BNPL at checkout. You’ll get an instant decision and can finalize your purchase after providing your payment details.
[Read: Best Low-Interest Personal Loans]
Best BNPL Apps
Here are recommendations for the best BNPL apps with flexible repayment terms and few fees.
Best Overall BNPL App: Afterpay
Pros
— Provides a virtual card you can use in stores.
— On-time payments can cause your loan limits to increase.
— Integrates with Google Pay and Apple Pay.
Cons
— Charges late fees.
— Monthly Pay plan can have interest rates as high as 35.99%.
— Monthly Pay not available in Hawaii, New Mexico, West Virginia or Nevada.
More Information:
— Installments: Pay in 4, Monthly Pay over six or 12 months.
— Interest rates: 0% – 35.99%.
— Minimum purchase amount: Varies by store.
Afterpay offers an interest-free plan that spans about six weeks, as well as monthly payment options that you can spread out over six or 12 months. APRs for Monthly Pay range from 6.99% to 35.99%.
While loan limits will vary by store and shopper, you could see your limit increase as you use Afterpay and make on-time payments. Afterpay also provides a virtual card and integrates with Google Pay and Apple Pay for convenient online and in-store shopping.
Best for No Credit Check: Splitit
Pros
— No credit check.
— Doesn’t charge interest or fees.
— Works with your existing credit card.
Cons
— Doesn’t work with debit or prepaid cards.
— Only available with certain merchants.
— Authorizes full amount on your credit card at the beginning.
More Information:
— Installments: Monthly.
— Interest rates: No interest or fees.
— Minimum purchase amount: Varies.
Splitit is a unique BNPL provider that lets you split up purchases on your credit card over two to 24 months. It’s available at Splitit’s partner merchants with your Visa or Mastercard, as well as American Express and Discover if the merchant allows.
There’s no credit check to use Splitit, since it works with a credit card you already have. When you use Splitit, you’ll pay off an initial installment followed by monthly installments for a pre-set period of time.
Splitit will authorize the full amount to your card at the beginning to guarantee repayment. It will renew this authorization every 17 to 21 days until you’ve paid off the amount in full.
Best for Large Purchases: PayPal Pay in 4
Pros
— No late fees.
— Comes with purchase protection benefit.
— Can finance up to $10,000.
Cons
— Only available for online purchases.
— Can only be used with merchants that accept PayPal.
— Not available in all states.
More Information:
— Installments: Pay in 4, Pay Monthly over six, 12 or 24 months.
— Interest rates: 0% – 35.99%.
— Minimum purchase amount: $30.
You can finance between $30 and $1,500 with PayPal’s interest-free Pay in 4 plan, as well as between $199 and $10,000 with its Pay Monthly option. PayPal’s Pay Monthly plan charges interest from 9.99% to 35.99% and spans six months to two years.
PayPal’s BNPL plans are only available when shopping online at merchants that accept PayPal. PayPal Pay in 4 is available in every state but Missouri and Nevada, while Pay Monthly is available everywhere but Arkansas, Hawaii, Massachusetts, Nevada, New York and Texas.
Best for Small Purchases: Klarna
Pros
— Multiple repayment plan options.
— Pay in 4 and Pay in 30 plans don’t charge interest or fees.
— Making on-time payments can increase your purchase power.
More Information:
— Installments: Pay Now, Pay in 30 Days, Pay in 4, Monthly Pay over six to 24 months.
— Interest rates: 0% – 33.99%.
— Minimum purchase amount: $35.
Klarna may be a good option for small purchases, since its minimum purchase amount is just $35 and it offers both one-month and six-week repayment plans with no interest or fees. You can also choose a monthly plan that spans six to 24 months that comes with interest rates of 7.99% to 33.99%. Klarna’s Pay in 4 plan is available in every state but New Mexico and Hawaii, while its monthly payment option is offered everywhere except Montana, New Mexico and Hawaii.
Best for No Fees: Affirm
Pros
— No late, prepayment, annual or account fees.
— Repayment terms up to 48 months for large loans.
— Offers both a virtual and physical Affirm card.
Cons
— Can’t change your payment due dates.
— Monthly pay interest rate can go up to 36%.
— Late or partial payments could hurt your credit score.
More Information:
— Installments: Pay in 4, Monthly Pay over one to 60 months.
— Interest rates: 0% – 36%.
— Minimum purchase amount: $50.
Affirm is a BNPL app that doesn’t charge late fees, annual fees or prepayment penalties. Its Pay in 4 plan doesn’t charge interest, while its monthly plan has rates up to to 36%. The most common terms for monthly pay are three, six or 12 months, but you might get terms from one to three months for small amounts and up to 60 months for large loans.
Affirm offers both a virtual and physical card that you can use while shopping in-store or online. Although this BNPL provider doesn’t let you change your payment due dates, it does allow you to choose your date if you set up autopay.
Tips to Use BNPL Apps Responsibly
BNPL apps offer a convenient way to purchase items you need now without having to pay the full cost upfront. However, this convenience can lead to spending past your means.
“There are certain risks associated with BNPL … such as overspending (and) impulse buying,” says Ohan Kayikchyan, a certified financial planner and money coach.
Accruing too much debt could not only derail your budget, but it could also harm your credit if you can’t afford your BNPL payments.
“Most BNPL accounts don’t report positive account activity to credit bureaus,” says McClary. “(However,) missed payments can be reported as past-due accounts or debt collection activity, which can negatively impact your credit score.”
To use a BNPL app responsibly, read over all the terms and conditions of your financing agreement. Take note of your payment amounts and schedule, and come up with a plan to make all your payments on time.
If you’re concerned about impulse shopping, consider saving up for an item before you buy. That way, you can pay it off upfront rather than relying on a financing plan like BNPL.
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Best Buy Now, Pay Later Apps originally appeared on usnews.com
