Shopping online is so easy- in a matter of minutes you can find and purchase whatever you are looking for, and with buy now, pay later (BNPL) programs, it is even easier to make a purchase by postponing payments until later.

Buy now, pay later is not new, it is like the old-school layaway plans department stores used to offer, that let shoppers hold their purchases by making periodic installment payments, usually interest-free. The difference is with buy now, pay later plans, you receive the product up front and pay in incremental payments later.

Who’s behind the buy now, pay later trend?

Installment payments are gaining popularity due to the surge in online shopping and retailers are being creative in trying to capture more sales by making it easier to hit the buy button. Buy now, pay later options are beginning to be offered by online retailers like Target, Walmart, and Amazon, and many BNPL providers are also including browser extensions, which can be downloaded and let you apply for online purchases. There are also the apps, which let you use installment payment options.

BNPL providers such as Afterpay, Affirm, Klarna, Sezzle and Zip are leading the way and PayPal is starting its own product. Amazon and Apple are partnering with Affirm and Target is teaming-up with Sezzle. According to a recent survey by LendingTree, approximately one-third of shoppers have financed purchases with BNPL and among those buyers, nearly two-thirds have done so five or more times in the past.

Financing for big-ticket purchases like home gym equipment can make financial sense, especially when financing is offered 0%. What is new with buy now, pay later financing is that it is being offered on small ticket items. Target’s, Sezzle offering is testing out installment purchases for food and other everyday product purchases. Shoppers can now utilize these short-term loan offerings to buy just about anything.

Why pay now when you can pay later?

As buy now, pay later programs make it easier for people to press the buy button, it will inevitably lead to many consumers spending more than they can afford, which can result in consumer debt. Unlike credit card purchases, which let you repay in 30 days, BNPL loans often require repayment every two weeks.

What should buyers be aware of when using BNPL?

If you are trying to build your credit score, most BNPL lenders do not report your on-time payments to the credit reporting companies, like credit card companies do, which means you may be losing out on the chance to build positive credit and boost your credit score.

According to LendingTree, 70% of the users of buy now, pay later programs have been charged interest or fees for missed payments. It can become difficult to keep track of multiple BNPL accounts which can lead to missed payments, late fees, deferred interest, or other penalties.