If you're one of those who use "Buy Now Pay Later" (BNPL) options when you're buying dinner or online items, it's time to rethink how this is going to look on your credit score in the near future.
We're just a few weeks away from the startup of new programs that will begin assessing how -- and how often -- you use BNPL options, and the assessment is soon to be incorporated when figuring your FICO and credit score.
And while the system that monitors BNPL transactions is gearing up very soon, it will take some time afterward to get the system up to speed and churning out enough data to feed into credit bureau data, but it's fairly certain that a year from now the use of BNPL will be documented in everyone's credit scores.
Senior Vice President of NBT Financial Janice Spooner says the loans, similar to payday loans, aren't predatory but do hurt proportionately large segments of young and lower income consumers -- and those who don't understand how the loans work.
"If they know about it and they've read the fine print, and know the risk and make the decision, I don't feel sorry for them. But I think our most vulnerable and our youngest are most at risk.
She warns that fees that can be continually added if the Buy Now Pay Later loan is not paid off quickly can bloat the final cost of the original purchase, making the overall cost huge when compared to paying cash or even using a credit card.
And in each case of using Buy Now Pay Later, she adds, "while this may be one quick little fix, it's unnecessary debt."