It's been called the "Buy Now Pay Later (BNPL) revolution," but it turns out the BNPL form of credit has been in a kind of tryout phase, and now credit reporting companies are getting ready to keep close track of BNPL purchases and include them in reports.
Micah Abigail LLC President and founder Micah Smith warns that a credit catastrophe could be coming for a large number of people who've gotten behind in their BNPL payments and who don't use credit wisely.
The "FICO" credit score people last month announced two new credit reports that will include BNPL, FICO Score 10 BNPL and FICO Score 10 T BNPL, set to start in the fall.
"People are financing things that you have to ask yourself this question, I'm financing food delivery, does this make sense?"
Credit specialist and Market President at Great Plains Bank Southlake Janice Spooner says it's special form of credit that can easily work against a consumer who doesn't use it wisely.
"It's unnecessary debut and it can compound and grow exponentially. And there can be added interest and fees and even late fees that add up very quickly, just like credit card debt."
The worst thing some people do, according to some credit specialists, is using credit to pay for food delivery services because that's when "paying off a $20 pizza over time and with interest payments, turns into a $50 pizza."
Smith says, "The borrower is slave to the lender, and one of the biggest things I talk about is just the importance of financial security and financial security comes from having good money habits. Paying for food deliveries with BNPL is not a good money habit."