Buy now, pay later plans may seem attractive but come at a cost, warn experts

Buy now, pay later.

For many people it’s an attractive idea at this time of year, with so much holiday spending taking place.

Such plans, which break the cost of a larger purchase into smaller, seemingly more manageable payments, are becoming a lot more common for consumers.

But experts warn that they come with a risk — especially if you’re trying to control your spending.

“There can only be so much of a shift when it’s the basic goods that we need, our food, our housing. When those prices have increased, there’s only so much give in the budget,” said Alex Bierman, a sociology professor at the University of Calgary.

“People generally spend more when using the buy now, pay later options than if they didn’t have those options,” said Bierman. “So, there’s a real risk that people essentially end up overspending even beyond the interest they may pay.”

The Credit Counselling Society says more and more Canadians are contacting them for help as inflation continues to shrink family budgets.

In November there was an 11-per cent spike compared to the same month last year.

“The problem is people build up a lot of little payments that are due every month or every quarter and over time it erodes all their cashflow,” said Mark Kalinowski.

His advice is to take some extra time to think about your purchase.

“If you need to buy now pay later, you probably don’t need to buy now,” said Kalinowski.

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