Staring at an Amazon cart that’s full to the brim with presents for your friends and fam? Sure, you’ve got payment options but a lot of them may not be exactly ideal. Debit cards typically don’t offer points or cashback, but the credit cards that do tend to have high interest rates. Some retailers offer layaway, but you’ll have to wait until you pay off your purchases to take them home.

If only there was a way to buy now and pay later with an app. 🤔 You see where we’re going with this. Companies like Affirm and Klarna are appearing at checkout at tons of retail sites — but are they actually helpful when it comes to paying off large purchases? Here’s how they work and what to keep in mind before you commit.

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Buy now, pay later apps are just another way for you to pay for something. They’re like mini loans that often come with super short repayment periods (about 4 weeks) and way low interest rates (as low as 0 percent — aka FREE). You can even find services that are fee-free.

You might see brands like:

  • Affirm
  • Klarna
  • PayPal
  • AfterPay

The vendor you’re buying from will have to accept the specific service you’re using. Like a credit card, you could even get bonus perks for using these services. For example, PayPal offers purchase protection and Klara gives app users “vibes” (like points) for each purchase that they can use for rewards later on.

  • You could be tempted to overspend. If you don’t have to pay up front for something, you might spend more than you can really afford. Make sure you’re keeping track of all the payments you’re going to make and when so you don’t overdraft your bank account or break your budget.
  • Interest might apply. Not every buy now, pay later service or transaction is interest-free. If you’re not sure what interest rate applies to yours, check the fine print.
  • There’s prob a minimum purchase amount. Unlike your credit card, you usually can’t use a buy now, pay later service on small orders.

  • When will payments be deducted? Make sure you know when the service is going to pull money from your linked account so you’ll always have enough money available and you don’t miss any payments.
  • What happens if you miss a payment? Understand whether any fees apply for a late payment and whether the service reports late payments to the credit reporting agencies.
  • Is there interest on your loan? Most services offer 0 percent interest on 4-installment loans, but don’t assume that’s how yours will work. Always double-check the terms you’re agreeing to.
  • Will this affect your credit score? Taking out a traditional loan can affect your credit score by shortening your average length of credit history and reporting any missed payments to credit bureaus. Take time to understand whether the service you’re using will have an impact on your score, even if you plan to pay it off on time without missed payments.

Easy-to-use apps that help you spread out payments on large purchases can be super helpful. But, like any credit or pay later service, there are downsides. If you shop wisely, they can be a great financial tool — and, they might just be the secret to getting everything on your gift list.