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What Is BNPL?
BNPL is a retail payment option that splits transactions into a set number of equal installments.
Installments are interest free, which accounts for much of BNPLs appeal.
However, Cruze warned this messaging is a marketing trap that almost always evolves into debt.
The number of approvals and the percentage of late payments also increased significantly.
Some spent thousands over several years, and a few have multiple outstanding balances.
One woman owed more than $9,000 onluxury retail purchases.
In 2021, the last year of CFPB data, over 10% of shoppers owed late fees.
BNPL Is Real Debt
Just because theres no official paperwork doesnt mean its harmless, said Cruze.
Those consequences might not be clear on the initial utility.
You wont see the cost-of-credit statements youd find on traditional credit cards but you still owe that money.
This lack of clarity makes consumers see BNPL as safer than it is.
Andretailers and lendersbenefit as consumers keep spending.
Cruze emphasizes this point to consumers who might find BNPL tempting.
If you have the money, then you dont need to pay later.
Think about food youve already eaten or a movie youve already seen, said Cruze.
With BNPL, youre still paying for it.
Instant gratification turns into delayed responsibility without the consolation prize of a shiny new purchase.
The No.
A budget is Cruzes foundational tool for money management because it offers users the freedom to spend responsibly.
Its way more enjoyable to live your life like that, Cruze added.
She explained that a budget shows you how much you have to spend in any category.
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