Buy now, pay later by replacing layaway programs at major retailers

The popular program is being replaced by “buy now, pay later” plans.

Layaway was once a popular way for struggling families to make their Christmas dreams come true.

You can put a small deposit on this essential toy and make small payments to bring it home and put it under the tree.

It didn’t require any credit checks and didn’t affect your credit score. Now stores like Walmart, Target, and Macy’s are phasing out their layaway programs.

RELATED: Why Toy Shortages Shouldn’t Be Stopping You From Filling Your Kid’s Holiday Wish List

Buy now, pay later

So what do they use instead? Something called “Buy now, pay later”.

Technically, these are point-of-sale loans. Like a layaway, you make a small deposit, but unlike a layaway, you can take it home right away. Then you pay off the balance in three or more installments. Often there is no interest on the loans.

Consequences on credit, excessive spending

Sounds pretty good, doesn’t it? Well, retail experts warn that “buy now, pay later” plans come with downsides. If you default on a payment it could hurt your credit score and it could be sent to a debt collector.

There is also a very significant risk that you are overspending. Last year, a survey found that nearly 60% of people who used point-of-sale loans regretted it because the item was too expensive. So borrower beware!

RELATED: What Experts Say You Need To Know About ‘Buy Now, Pay Later’ Programs

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