How to Avoid Buy Now, Pay Later Overspending

Quick Answer

BNPL is a convenient payment option, but the ease and affordability can also make it easy to overspend. You can avoid overspending by limiting active plans and using responsible borrowing habits.

Buyer enjoys the convenience of shopping online with BNPL.

Buy now, pay later (BNPL) can be a useful tool when making purchases—but it can be easy to overextend your budget if you let it get out of hand. In this article, we'll explore nine ways to avoid BNPL overspending.

1. Set a Clear Budget

As with other forms of borrowing, you shouldn't spend more than you can afford. If you don't already have one, create a budget based on your monthly income, expenses and savings contributions. This gives you an idea of what you can spend on BNPL purchases each month.

Be aware of the tendency to overspend when you're using buy now, pay later. Set a spending limit for purchases to avoid exceeding your budget. BNPL plans typically require 25% of the purchase upfront and payments every two weeks until the purchase is paid (often six weeks), so remember to double the biweekly BNPL payment amount to get the monthly amount when factoring it into your budget calculations.

2. Compare BNPL With Other Payment Options

Consider upcoming expenses and compare your other payment options, such as a credit card or debit card, before using BNPL for a purchase. Using a debit card means you won't have to keep track of payments and are limited to the amount in your checking account, while a credit card may be a good option if you know you can pay off your purchase quickly and earn rewards at the same time. More on this below.

If you're settled on BNPL, compare terms among providers. Finally, be sure to check prices with different retailers to be sure you're not overpaying simply because a store offers BNPL as a payment option.

Factor in upcoming regular expenses to be sure you can afford BNPL payments on top of everything else you have to pay for.

3. Avoid Using BNPL for Impulse Spending

Studies show many shoppers come to regret using buy now, pay later for purchases because the items they purchased are too expensive or they spent more than they could afford. Returns for items purchased with BNPL can be complicated and don't eliminate your payment obligations right away.

Avoid buying on impulse. Instead of buying on the spot, give yourself a cooling-off period to consider the purchase. Delaying purchases gives you time to reflect on whether an item is something you need or an impulse buy you can live without.

If you've decided on a purchase, determine the best time to buy based on how it fits your budget and financial goals. Unsubscribe from marketing emails to reduce the chances that you'll be tempted with sales offers and promotional discounts, increasing your financial obligations.

4. Use Responsibly

Borrowing always comes with risks. Avoid borrowing more than you can afford, even if the monthly payments seem manageable. BNPL lenders may raise your borrowing limit based on your spending and repayment history, but that doesn't mean you can afford to spend more.

Make sure you're not borrowing for the wrong reasons; for instance, to keep up with trends. If BNPL is the only way you can afford an expensive item, reconsider. If you've overextended your budget, you may have a hard time covering other expenses and financial obligations—which could result in late fees and even a lower credit score.

5. Monitor Your Spending

Keep track of your purchases and your total balance, especially if you use more than one BNPL plan at a time. Have a clear idea what you can afford to pay, and be sure you don't exceed that amount. Regularly review your outstanding plans and upcoming payments so you know where you stand before making a new purchase.

Overspending with BNPL products may be linked to a general uptick in personal spending. Track your overall spending in addition to BNPL purchases for signs that you are regularly going over your monthly budget. For instance, you may be spending too much if you're spending more than you earn, ignoring opportunities to save money or justifying unnecessary purchases.

6. Monitor Payment Deadlines

Your BNPL provider may require automatic payments from your bank account. With BNPL payments on autopay, it's easy to forget about due dates. And if you don't have enough money in your bank account to cover the payment, you could overdraw your account and trigger overdraft charges from your bank. Understand how your BNPL deadlines line up with your paydays and other bill due dates so you can confirm there's enough money in your account to cover your BNPL plan payments and other expenses.

If your BNPL provider doesn't require autopay, set reminders for upcoming payments so they don't sneak up on you. Late fees vary by provider and aren't always clearly disclosed. And, depending on your BNPL provider, missing a payment may mean you'll be charged interest, adding to your costs.

7. Limit the Number of BNPL Plans

Having multiple simultaneous BNPL plans, especially with multiple providers, can make it difficult to manage payments and keep track of your overall balance. It's your responsibility to monitor the number of outstanding plans you have and avoid new borrowing if you're spread too thin. Limit the number of BNPL plans you have at any time to keep yourself from overspending.

8. Understand What You're Getting Into With BNPL

Many BNPL plans offer a "pay in four" model, with four biweekly payments, but not all of them. More plans are extending payments for a longer period of time and charging interest. The payment options available depend on the purchase amount and the provider.

You may have to do some extra digging to be clear on what you're being charged; even the Consumer Financial Protection Bureau has found some BNPL disclosures lacking in clarity. Check the frequently asked questions and disclosures for the BPNL service you're using to understand the terms and conditions before taking on a new plan.

9. Consider Using a Credit Card

Using a credit card has some benefits over BNPL. You'll have one balance to repay for all your purchases and a grace period to avoid interest, provided you started the billing cycle with a zero balance. Some credit cards offer an installment plan feature for large purchases that allows you to pay in fixed monthly payments. Depending on your credit, you may be able to qualify for a 0% introductory rate credit card allowing interest-free purchases for a year or more, which could give you more time to pay off a purchase at a better rate.

Credit cards also have the benefit of helping build your credit, earning rewards on purchases and providing stronger consumer protections.

The Bottom Line

Though it's convenient, buy now, pay later comes with a risk of overspending. Consider using other payment options to protect your finances. To start, check your credit score to gauge whether you qualify for a credit card with more flexibility and better terms. If your credit could use some improvement, you could get a score increase right away using Experian Boost®ø to get credit for eligible bills you already pay, such as rent, insurance, streaming services and utilities.