Amazon Prime Day Hits Record Sales, Boosted by BNPL Plans [CNET]

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The big winner of Prime Day may be Buy Now Pay Later.

Amid Amazon’s record-setting Prime Day shopping event, BNPL installment plan purchases were expected to drive between $1.09 and $1.11 billion in spending, according to Adobe Analytics. That would come out to more than 18% growth over last year.

And while the option to spread out payments may be helpful for a big purchase, it can be easy to overspend and wind up with multiple payment plans to manage if you’re not careful. More than half of people who use BNPL said they’ve experienced at least one problem, including overspending, missing payments and regretting purchases, according to a survey by Bankrate, CNET’s sister site.

If you’re still shopping for Prime Day deals — or you’ve already made multiple purchases — the BNPL option may seem like an easy solution, but overusing this payment type comes with risks.

What are buy now, pay later plans?

Buy now, pay later services are installment plans that let you spread out a purchase in payments over a short period of time, generally four payments over six weeks. They’re similar to the old layaway plans, with two major differences: First, you get your purchase with the first payment instead of after the last payment. And second, BNPL apps make it faster and easier to use the services.

Unlike credit cards, BNPL plans typically don’t require a credit check to get approved.

Are BNPL plans riskier than credit cards?

BNPL are similar to credit cards, but typically offer a slightly longer period of time for paying off a purchase and don’t charge interest. Some longer BNPL financing plans may charge interest, but it’s typically simple interest — not compounding interest that can make credit card debt so easy to rack up. BNPL plans may also tack on a late fee if you miss an installment.

The BNPL market has grown over recent years, with companies like Affirm, Klarna and Afterpay leading the market. Many major credit card providers have also joined the game, offering their own short-term financing options.

How to use BNPL without overspending

There’s nothing inherently wrong with BNPL plans, so long as you use them responsibly. Just as with credit cards, it’s important to make sure you don’t overspend and make on-time payments. If you’re using BNPL for ongoing Amazon deals post-Prime Day, keep these tips in mind:

Plan ahead. It’s easy enough to think you can afford a purchase because the first payment is easy enough to cover. But make sure you’ll have enough money to cover the ongoing amount for the rest of the payments, without pulling from other priorities.

Manage your plans. Whether you’re making one or multiple purchases on a BNPL purchase, it’s important to keep track of the payment plans. Set reminders on your calendar for payment dates to avoid unwelcome surprises like overdrafting on your bank account.

Use Amazon’s layaway. Remember layaway? Yeah, Amazon still offers it. Unlike BNPL, you have to wait to get your purchase until you make the final payment, but that could actually be a good thing. If you realize you can’t afford the purchase, you’ll get a full refund of the amount you’ve already paid. The downside: It’s not available for every product and isn’t offered in every state. 

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Tiffany Wendeln Connors is a senior editor for CNET Money with a focus on credit cards. Previously, she covered personal finance topics as a writer and editor at The Penny Hoarder. She is passionate about helping people make the best money decisions for themselves and their families. She graduated from Bowling Green State University with a bachelor’s degree in journalism and has been a writer and editor for publications including the New York Post, Women’s Running magazine and Soap Opera Digest. When she isn’t working, you can find her enjoying life in St. Petersburg, Florida, with her husband, daughter and a very needy dog.