The highly anticipated sales event at Amazon is approaching, taking place on October 8 and 9. As shoppers prepare to explore the exciting Prime Day bargains, it’s wise to rethink the payment method known as “buy now, pay later.” Although these financing options seem attractive for paying in installments without interest, they carry considerable risks and drawbacks that could make them less appealing for Prime Day purchases. According to a Bankrate survey, nearly 20% of consumers using BNPL have missed their payments, and 30% have overspent. Let’s examine the underlying costs associated with “buy now, pay later” and why opting for upfront payments is likely a better strategy for your Prime Day acquisitions.

Heavy Late Fees

One of the most considerable threats linked with buy now, pay later options is the potential to miss a scheduled payment. When an installment is late, borrowers can typically face penalties starting at $7 or higher, imposed by the lender. Missing multiple payments can rapidly escalate these fees, causing what seemed like a budget-friendly Prime Day bargain to become prohibitively expensive due to accumulating late charges.

Unforeseen Interest Charges

Although buy now, pay later services promote themselves as interest-free methods of financing, this can be misleading. Often, the 0% interest benefit only applies if the entire balance is cleared by a certain deadline. Should any amount—however small—remain past this date, interest may start accumulating at rates that can surpass 25% in some scenarios. Thus, consumers should be cautious; without careful monitoring, it’s all too easy to incur additional interest costs.

Effects on Credit Scores

Despite the fact that buy now, pay later services aren’t traditional forms of credit, payment behaviors are often reported to credit bureaus. Missing payments or failing to fulfill the terms of the installment agreement can damage your credit score, complicating future approvals for mortgages, car loans, credit cards, and other types of financing. Recklessly using BNPL can negate any savings achieved during Prime Day.

Limited Purchase Safeguards

When utilizing a credit card, consumers benefit from essential purchase protections such as extended warranty coverage, price assurance, and dispute abilities in cases of fraud. Unfortunately, these advantages are usually absent with buy now, pay later agreements. This lack of safeguards leaves consumers vulnerable if issues arise with Prime Day purchases or if a retailer fails to address concerns. The prudent choice is to only acquire items within your financial means during Amazon’s sales event, even if the deals appear enticing.