“Buy now, pay later” might sound like a sketchy slogan you’d see outside a used car dealership, but it’s actually an increasingly common and convenient way to break up your online purchases.
Buy now, pay later (BNPL) apps let you divide your purchases into four or more equal payments: you’ll pay 25% upfront and 25% more every two weeks until your purchase is paid off.
Unlike a new line of credit, you can get instantly approved for buy now, pay later, and if you meet the right criteria you also won’t even have to pay interest. So instead of paying $100 upfront for Airpods on Amazon, you’ll only have to pay $25 every two weeks. Due to their convenience, roughly 40% of Americans have used a buy now, pay later service, according to Credit Karma.
An interest-free loan that you’re instantly approved for? What’s the catch? How will BNPL affect your credit? Are there any hidden fees? And overall, which buy now, pay later apps are the best?
Let’s investigate the best buy now, pay later apps.
Overview of the best buy now, pay later apps
|Buy now, pay later company||Best for||Terms||Competitive feature|
|Affirm||Big purchases and long terms||3, 6, and 12 months||High loan ceiling up to $17,500|
|Afterpay||Gift shopping||Pay in 4 installments||Steep discounts on luxury goods|
|Klarna||Paying $0 upfront||Pay in 4 installments, pay in 30 days||Pay in 30 lets you defer 100% of principal for a month|
|PayPal Credit||Widespread acceptance||Pay in full within 6 months||Open a 0% APR line of credit faster than a credit card|
|Quadpay||In-store purchases||Pay in 4 installments||Accepted anywhere Visas are accepted|
|Sezzle||Payment schedule||Pay in 4 installments||Ability to reschedule payments to avoid late fees|
Compared to other buy now, pay later apps, Affirm is best-suited for financing bigger purchases over a longer term.
Most BNPL apps follow a “pay in four” payment schedule: one payment at the time of purchase, then three more every two weeks so you’re paid up within six weeks. By contrast, Affirm’s terms are 3, 6, and 12 months.
Another thing I like about Affirm is its massive selection of vendors. Amazon and Wal-Mart are there, but also Tire Rack and Motorola.
Money Under 30 gave Affirm a 9 out of 10, lauding its low-to-no interest rate and long-term payment schedules suitable for medium- to large-sized purchases.
Afterpay follows a traditional “pay in four” model, charging you a quarter of the purchase price upfront, then the remaining quarters every two weeks.
Browse Afterpay’s current deals and you’ll quickly pick up on a theme: this is not exactly essential stuff. Afterpay mostly partners with luxury, lifestyle, fashion, and home decor brands. It seems mostly like a retail therapy destination, but that doesn’t mean you can’t make some essential purchases there, like business attire and exercise clothes.
Plus, I like how Afterpay has a dedicated tab for black-owned businesses and also highlights sales and BOGO deals within its own dashboard, so you can save big and pay in installments.
All things considered, I think Afterpay makes a solid destination for gift shopping. If you want to impress a loved one with a nice gift but payday comes after their birthday, you might consider buying it through Afterpay.
Klarna is a popular buy now, pay later app with a giant vendor list and a unique twist on the BNPL formula.
In addition to your typical “pay in four” schedule, Klarna offers a “pay in 30” plan where you pay nothing up front, and pay your principal in full exactly 30 days later. As long as you make the full payment, Klarna charges no interest.
Pay in 30 is useful if you’re really squeezed for cash this month but need to make a large essential purchase. For example, maybe you just moved to your first job out of college and need to buy a quality mattress. Spending a thousand bucks on a mattress is a good investment for your health and happiness, but payday isn’t for three weeks and you only have $203 in your account. Pay in four won’t work because you’ll overdraft, but pay in 30 is perfect.
For better or worse, Klarna doesn’t report payments to credit bureaus. That’s a lucky break if you miss a payment since it won’t impact your credit score, but a bit of a downer if you pay on time since it won’t boost your credit score either.
In total, Klarna’s chief competitive advantage is its pay in 30 feature. If the above scenario sounds familiar to your own situation, Klarna might be a good fit.
PayPal Credit is a line of credit you open through PayPal that you can use to make multiple big purchases anywhere PayPal is accepted.
The minimum line of credit with PayPal Credit is $250, and to qualify for 0% interest for six months, each of your purchases must exceed $99 (hey, don’t ask me why).
In all honesty, PayPal Credit doesn’t make many “Best Buy Now, Pay Later” lists because of its backward approach to credit reporting. PayPal Credit makes a hard credit check upfront then never reports to the credit bureaus again. There is no scenario where PayPal Credit can improve your credit; only hurt it.
So why did I include it in this list? PayPal Credit carves a niche by offering three key advantages over both credit cards and BNPL apps.
PayPal Credit’s advantage over a 0% APR credit card is that it arrives instantly, whereas a card could take 7-10 days to arrive. Compared to BNPL apps, PayPal Credit doesn’t require payments in preset installments; just 100% within six months.
Most buy now, pay later apps are designed for online purchases. But sometimes, brick-and-mortar stores offer the best deals. For example, I bought the display model of a flagship TV at Costco for half off its MSRP – can’t do that online!
Luckily, there’s Quadpay, quite possibly the best buy now, pay later app for in-store shopping. Quadpay works a little differently from your typical BNPL app. Instead of shopping through the BNPL app like a giant online marketplace, you simply tell Quadpay where you are and how much you need to pay, and POOF! Quadpay instantly produces a virtual Visa card for use at that store.
Quadpay can still be used online, and is accepted anywhere Visas are accepted. It follows a strict pay in four plan, but at least it only makes soft credit pulls and charges no fees and no interest for on-time payments.
Finally, there’s Sezzle. Aside from a name that sounds like an ice cream topping, Sezzle doesn’t seem to offer much unique or special among buy now, pay later competition. It follows the usual pay in four structure, it charges no interest and no fees for on-time payments, and Sezzle is accepted at over 26,000 vendors. Woohoo.
The vanilla nature of Sezzle almost caused it to fall off this list until I read the fine print. Sezzle quietly offers a single, sugary sweet feature that could make all the difference: payment rescheduling.
Here’s how it works, and why it’s such a big deal. In short, Sezzle will let you shift back all of your remaining payments by up to two weeks. So if payment number two is coming up and there’s an issue with your paycheck, instead of payments scheduled one, three, and five weeks out, you can push them back to three, five, and seven weeks out.
You can reschedule payments up to three times per order. The first reschedule is free, and the second and third are just $5 – not bad if it means avoiding interest and late fees!
For that reason, Sezzle is a great BNPL app choice if you know you need to make an essential purchase and pay in installments, but you’re not 100% confident you’ll be able to make the first 25% payment in two weeks.
How I came up with this list
To come up with this list, I vetted over a dozen popular buy now, pay later apps and services. The ones you see rose to the top because they scored above average in most of the following categories:
Naturally, the first thing I looked at was fees. All buy now, pay later apps must charge fees or interest somewhere to stay in business, so I judged them on their transparency and approach to charging their customers.
For example, Sezzle won points for charging only $5 for a second payment reschedule (the first one is free), whereas a not-to-be-named competitor got booted off the list for wringing gotcha fees out of unsuspecting customers.
Of less importance than fees was the flexibility of terms. Most buy now, pay later apps stick with the standard pay in four model, but apps with more flexibility won brownie points in this category.
Naturally, a buy now, pay later app is only as good as the list of vendors that accept it. Each of the apps on this list has a laundry list of retail partners who play ball, where you can buy both essentials and discount gifts – not just overpriced luxury goods.
Usability and design
Most buy now, pay later apps are just a few years old, so there’s no excuse for confusing design or lack of optimization. So to make this list, the buy now, pay later app must be clean, intuitive, and effortless to use.
Customer ratings and reviews
Lastly, nobody tells the truth quite like the app’s users. Controlling for negative reviews from users who didn’t read the fine print, are customers happy with the buy now, pay later app? Does the app score above four stars in both the App Store and the Play Store?
I’d never send you to an app that clearly needs work, so only high-scoring apps with happy customers made this list.
What is a buy now, pay later app?
Buy now, pay later (BNPL) apps and services let you purchase items online and pay for them over time, typically in weekly, semi-weekly, or monthly installments. The most common number of installments is four.
If you’ve bought something online recently, you might’ve already noticed a buy now, pay later option during checkout. PayPal Credit is a pretty common example.
To stay competitive, most buy now, pay later apps charge no fees and no interest. If you buy a $100 set of Airpods through Affirm, for example, you’ll only pay four installments of $25. No hidden fees, no markups, nada.
How does a buy now, pay later app work?
In short, most BNPL apps work like this:
- Download the app and link your bank or credit card.
- Shop on Amazon, Dell, or thousands of other online stores through the app.
- Add item(s) to your cart.
- Choose the BNPL payment option at checkout.
What’s the catch to buy now, pay later apps?
In short, most BNPL apps work like this:
Well, it’s all cake and roses as long as you make your payments on time. If you miss a payment, however, it’s like stepping on a financial landmine.
First, you’ll be subject to sky-high interest up to 29.99%. Unlike a credit card, BNPL apps often charge interest on the entire purchase amount, not just your remaining balance. Plus, the app’s attempt to withdraw from your bank account may result in overdraft fees from your bank, as well.
Next, you can be subject to late fees. These aren’t too bad, usually around $20, but they certainly ruin the whole point of the deferred payment.
Last and certainly worst, some buy now, pay later apps may report your late payment to the credit bureaus, lowering your credit score.
In short, buy now, pay later apps are convenient but risky. According to a survey by Credit Karma, 38% of BNPL users have missed at least one payment, and 72% have seen their credit score drop as a result.
Should you use a buy now, pay later app?
A responsible way to use a buy now, pay later app is to finance the purchase of something you need but can’t afford yet.
For example, let’s say you need a new work laptop for $1,000. You have less than a grand in your account now, but you’ll have much more than that after your first payday. But you need a work laptop to work!
You could take out a personal loan, but you’ll almost certainly be subject to around 6%-10% interest. Plus, the turnaround time for personal loans can take up to a week, whereas most BNPL apps will approve you instantly.
You definitely aren’t considering getting a payday loan because they’re evil and ruin lives.
So, that leaves buy now, pay later as the best option! Still, to avoid delinquent payments and a tidal wave of fees, I strongly recommend that you
- Set up automatic payments from your bank to the BNPL app.
- Set reminders on your calendar for your upcoming payment due dates.
When shouldn’t you use a buy now, pay later app?
Buy now, pay later apps have drawn some scrutiny from economists and watchdog groups not just because they load boobie traps full of fees, but because they encourage retail therapy and overspending.
“When you make something so convenient, people may not be really thinking, ‘Do I have the budget? Can I afford this payment?’ You get more of that impulse-shopping behavior that leads to realizing they may not be able to make the payment” says Gannesh Bharadhwaj of Credit Karma, as quoted in Reuters.
Now, you could argue that credit cards have been doing the same thing since 1950, and that at least BNPL apps charge no interest.
But regardless of your moral stance on buy now, pay later apps, there’s one objective truth to them; if you value your credit score and hate fees, you should only use BNPL apps to finance needs that you know you can afford by the payment due date.
Here are some examples of purchases you shouldn’t put on a BNPL app. These are things you should instead pay cash for to ensure you really want it and can afford it:
- Playstation 5 / Xbox Series X / rig upgrade.
- Jewelry or a new handbag.
- Designer clothes or accessories.
- Custom car tuning or nonessential accessories.
- Non-work-related consumer electronics.
Alternatives to buy now, pay later apps
Buy now, pay later apps are best suited for financing small purchases under $1,000 in a short frame of time, usually under two months.
If you’re looking to finance a larger purchase over a longer period of time, a personal loan is a better fit. You’ll pay at least 3% interest, but the extended-term and smaller installments may be better suited to your present financial situation than a “pay in four” loan.
Fiona is like the kayak.com of personal loans. Visit Fiona, plug in some basic loan and personal information, and voila – you’ll see multiple competing loan offers from reputable lenders at once.
Credible is another great option. Credible asks for a bit more upfront but returns quotes from a higher number of reputable lenders. Plus, Credible offers a Best Rate Guarantee: if you find a better rate somewhere else, Credible will cut you a check for $200.
0% APR credit cards
If you’re looking to finance a large purchase interest-free, or would like to put a high quantity of small purchases under a 0% APR umbrella, you might consider opening a credit card with an introductory 0% APR offer.
The advantage of a 0% APR card is that as long as you make minimum payments, you won’t pay interest on any purchase up to your max line of credit for a year or more. The downside is that opening a new line of credit negatively impacts your credit score, and cards with 0% APR offers usually don’t offer the best rewards or other incentives.
That said, here are two prime picks for 0% interest cards.
First, the Citi Rewards+® Card offers a 0% intro for 15 months on Purchases and a 0% intro for 15 months on Balance Transfers, meaning you can move over your old credit card debt to your new card and won’t owe interest on it for over a year. After the intro APR, you’ll have an APR of 13.49% – 23.49% (Variable).
In terms of rewards, the Citi Rewards+® Card offers 2x points at gas stations and supermarkets for the first $6,000 per year, and 1 point per $1 spent thereafter. On top of that, this card automatically rounds up every purchase to the nearest 10 points.
Alternatively, the Chase Freedom Flex℠ card also offers a 0% Intro APR on Purchases for 15 months, and while it doesn’t offer a balance transfer incentive, its cash back incentives are much more attractive than its competitor’s. After the intro APR, you’ll have an APR of 14.99 – 23.74% Variable.
First, you’ll get a $200 cash back as soon as you spend $500 on the card within three months (not hard to do). Plus, you’ll earn 5% on quarterly bonus categories (Home improvement stores, gas stations, etc.), 3% back on restaurants and drug stores, and 1% back on everything else.
The most important features of a buy now, pay later app
What features should you look for in a buy now, pay later app? Conversely, what “gotchas” should you avoid?
Most BNPL apps offer 0% interest some of the time. The higher your credit, the more likely you are to be offered 0% interest. Credit scores of 600 or lower might be subject to interest as high as 30%.
Each app may view your creditworthiness differently, so the key is to pay careful attention during checkout to see your final interest rate.
Prepayment and late payment penalties
Most BNPL apps will publish their late fees on their site, if any, but you should also pay careful attention to the prepayment penalties.
Even though it seems like you’re doing them a favor, paying off your loan early causes headaches for lenders since it throws off their books and can cost them interest. Therefore, even BNPL apps will charge you a prepayment penalty.
So if becoming debt-free ASAP is important, ensure your BNPL app has no prepayment fees.
Installments and terms
Some BNPL apps let you pay back in 2, 4, even 16 installments, while others restrict you to just 4 for simplicity.
Also, BNPL apps can offer terms as short as two weeks or as long as one year. Consider the day of the month you get paid, and be sure to choose an app that offers the flexibility you need.
Minimum and maximum loan amounts
Buy now, pay later loans can range from $50 to $2,500. The average sits around $750. If you’re looking to finance a larger purchase, ensure that your chosen BNPL app can not only accommodate the amount, but will pre-approve you for it.
If you’re looking to finance a purchase greater than $2,500, consider applying for a personal loan instead.
When all’s said and done, buy now, pay later apps are lenders just like banks (in most cases, they are banks). That means they’ll likely take a soft credit pull to approve you and set your interest rate.
A credit score of 550 is pretty much the floor for most BNPL apps. But if your credit score is below 650, you might want to consider improving your credit before putting it at risk with a high-interest BNPL app purchase.
Some buy now, pay later apps report your payments to the credit bureaus and some don’t.
If you’re certain you’ll make on-time payments, you’ll actually want to borrow through an app that does report since it can boost your credit.
If you’re not sure you can make the payments, you probably shouldn’t borrow the money at all.
Automatic payment functionality
Last but certainly not least, you should ensure that your chosen BNPL app has automatic payment functionality. This is the easiest way to ensure you don’t miss a payment due to absent-mindedness.