Buy Now, Pay Later plans allow consumers to make purchases by spreading out the payments over time. Paying for an item in multiple installments can be attractive if you can't immediately cover the cost in full.
With more companies offering BNPL both online and in stores, more shoppers are taking advantage of these options. Over 93 million US adults were expected to use BNPL services in 2024, with the number of users increasing annually over the next several years, according to research from eMarketer.
These installment plans are particularly appealing if you have poor credit or can't access a credit card with an introductory purchase APR. But BNPL services have fees that can sneak up on you, as well as other disadvantages, particularly if you struggle with debt or are prone to overspending.
If you're considering using a BNPL service for holiday shopping or a big purchase, here's how to choose the right one.
Best BNPL lenders compared
| BNPL service | Affirm | PayPal | Sezzle | Klarna | Zip |
|---|---|---|---|---|---|
| Best for | Most shoppers | Large purchases | Building credit | Budgeters | Simple short-term payoff plan |
| Terms | Pay in 4 or monthly installments | Pay in 4 or Pay Monthly | Pay in 4; Monthly installment plans up to 48 months | Pay in 4; Pay in 30; Pay Monthly for up to 24 months | Pay in 4 |
| APR | 0-36% | 0-35.99% | 0-34.99% | 0-33.99% | None (although installment fee adds to the cost) |
| Purchase limits | Up to $5,000 with monthly installments (potentially higher for some shoppers) | Up to $10,000 with monthly installments | Undisclosed, varies by user | Varies by user | Undisclosed |
| Fees | None | None | $15 late payment fee, $1.50 convenience fee for certain payments and $7.50 rescheduling fee | $7 late payment fee | Installment fee up to $7.50 |
| Available merchants | More than 245,000 | 35 million sites and anywhere that accepts PayPal in person | 47,000 brands | $550,000 | Tens of thousands of retailers including names like Amazon, Apple and Target |
| Virtual card | Yes | Yes | Yes | Yes | Yes |
| Amount due at purchase | Varies | 25% of purchase price with Pay in 4; varies with Pay Monthly | Typically 25% of purchase price | None with Pay in 30; 25% of purchase price with Pay in 4 | 25% of purchase price, plus a portion of installment fee |
| Credit reporting | Soft credit check; First monthly installment loan is reported to Experian | Soft credit check; no regular credit reporting | Sezzle Up users can opt in to reporting to all three credit bureaus | Soft credit check; no regular credit reporting | Soft credit check; no regular credit reporting |
- Installment options: Pay in 4; Monthly installments ranging from 3 to 60 months
- APR: 0–36%
- Purchase limits: $50–$1,000 for Pay in 4; $50–$5,000 for monthly installments (may vary by store)
- Fees: None
- Available merchants: More than 245,000 merchants, plus options for one-time use virtual cards
- Virtual card: Yes
- Amount due at purchase: Varies
- Credit reporting: First monthly installment loan is reported to Experian
Perhaps the most recognizable among BNPL services, Affirm pops up when you check out at Target, Amazon, Walmart, Expedia, Verizon and more. Just about every major name in commerce offers Affirm as an option.
Affirm has been working to expand its reputation as a go-to payment option, and not just for online purchasing. It now offers a physical debit card that you can use anywhere Visa is accepted (which is just about everywhere).
The card touts no fees, and if you opt for pay in 4, you won't have to worry about interest. But if you choose monthly installments, be careful to check your interest rate. Annual percentage rates can reach a maximum of 36%.
While this is higher than most credit cards, Affirm charges a simple interest rate, whereas credit cards charge compound interest. Your interest rate will only apply to the amount you borrowed, not to the interest you accrued (in other words, you won't accrue interest on top of interest).
- Installment options: Pay-in-4 and Pay Monthly
- APR: 0% for Pay in 4; 9.99% - 35.99% for Pay Monthly
- Purchase limits: $1,500 for Pay in 4; up to $10,000 for some Pay Monthly plans
- Fees: None
- Available merchants: 35 million sites
- Virtual card: Yes, must be used within 24 hours of approval
- Amount due at purchase: 25% of purchase with Pay in 4; varies with Pay Monthly
- Credit reporting: Soft credit check
While PayPal's Pay-in-4 purchase limit is fairly low, the $10,000 maximum for Pay Pal's Pay Monthly plans is among the highest of BNPL providers. That also makes it easier to rack up debt, so use it responsibly.
If you're already familiar with PayPal, you'll find its Pay-in-4 option quite intuitive. Both of these plans come with purchase protection, which can offer some peace of mind if you buy something that arrives damaged.
One drawback of PayPal is its geographic limitation: Residents of Missouri and Nevada are currently unable to use the Pay-in-4 option, and residents of Alaska, Connecticut, Hawaii, North Carolina and Nevada cannot use the Pay Monthly service.
- Installment options: Pay in 4 and monthly plans between 3 and 48 months
- APR: 0% for Pay in 4; 5.99% - 34.99% for monthly plans
- Purchase limits: Undisclosed and varies by user
- Fees: $15 late payment fee, $1.50 convenience fee for making a payment from a credit or debit card, $7.50 rescheduling fee for changing the date of a payment
- Available merchants: More than 47,000 including big brands like Amazon, Walmart, Instacart, Doordash and Hotels.com
- Virtual card: Yes
- Amount due at purchase: Typically 25% of purchase price
- Credit reporting: Soft credit check. Users can opt to use Sezzle Up and have their payment history reported to the three major credit bureaus
Sezzle offers a rare benefit in the BNPL world: the chance to improve your credit score. The company's Sezzle Up option allows users to have the company report their payment history to Experian, Equifax and TransUnion. According to Sezzle, users with credit scores below 600 have seen an average uptick of around 20 points within four months.
While this option stands out due to its credit-building opportunities, it has more fees than the competition.
It's worth noting that another BNPL service we analyzed, Perpay, also offers a credit-building feature, but Sezzle's reviews for iOS and Android outperformed Perpay.
- Installment options: Pay in 4 and Pay in 30 plans, plus installment plans between 6 and 24 months
- APR: No interest for Pay in 4 and Pay in 30; 7.99% - 33.99% for monthly installment plans
- Purchase limits: Limits set for each applicant and each purchase
- Fees: $7 late fee
- Available merchants: 550,000
- Virtual card: Yes, and the payment terms are different (3 and 6-month options) with the new Klarna Card
- Amount due at purchase: 25% of the purchase price with Pay in 4; no upfront payment necessary with Pay in 30
- Credit reporting: None; soft credit check
Klarna's website will tempt you to spend money. It looks less like a financial product and more like an online mall where you can buy everything, from Nike shoes to Ray-Ban sunglasses.
However, the app does have a feature that lets you set personal spending limits for your Klarna shopping.
You'll need to keep yourself in check if you think about exceeding that limit, but nonetheless, it's a point of differentiation and a welcome perk for anyone who has struggled with overspending.
Klarna's Pay-in-30 option is also notable because it requires no upfront payment.
- Installment options: Pay in 4
- APR: No interest
- Purchase limits: Undisclosed
- Fees: Installment fee between $0 and $7.50
- Available merchants: Tens of thousands of retailers including Amazon, Walmart, Target, Airbnb, Apple and more
- Virtual card: Yes
- Amount due at purchase: 25% of purchase price, plus a portion of the installment fee
- Credit reporting: None; soft credit check
Zip stands out for its simplicity. With just one option -- four installments over six weeks -- there's no need to crunch the numbers between different monthly plans with different fee structures.
Zip's short six-week repayment period could force you to think about the real cost of your purchase and help prevent overspending. While a lot of the other apps on this list are great, splitting a purchase into 24 or 48 months of installments can wind up costing quite a bit more.
There is an installment fee of up to $7.50, though, and Zip's example of how the fee impacts your purchase reminds us that small fees can be a relatively big budget drag.
What are BNPL apps?
Buy Now, Pay Later services are micro-installment loans that allow you to make a purchase and spread out the payments across weeks or months.
BNPL plans are different from credit cards. While credit cards are revolving loans -- meaning the loan remains open while you make payments -- BNPL plans are installment loans. Borrowers make regular installments (payments) until the loan is fully paid off and closed.
In most cases, BNPL plans offer interest-free options if you pay off the purchase in four installments. If you need the ability to spread out the payments over a longer period of time, you'll likely pay additional fees.
How do BNPL apps work?
BNPL apps work differently depending on the service and installment plan. Many offer a pay-in-four installment system, where you can split the cost into four different installments over a period of six weeks, with the first installment due upfront. The majority of pay-in-four plans don't charge interest. Other BNPL apps offer monthly installment plans, with interest rates that can stretch above 30%.
Some BNPL apps can be used at online or brick-and-mortar stores via virtual or physical cards, while others can only be used at select vendors. Many BNPL apps partner with select stores and brands to offer discounts on goods purchased via their app.
Pros and cons of BNPL apps
Pros
- Easy to qualify: BNPL apps have much lower approval requirements than other credit products, which makes them a good fit for people with blemishes on their credit reports.
- No initial impact on your credit: When you apply for a credit card or installment loan, your application requires a hard credit check, which can cause your credit score to take a hit. You won't face that with BNPL apps, which use a soft credit check in the application process.
- A plan to pay it off: BNPL services come with a calendar that will help you know exactly how much you're going to pay each month and the final payment date. That's good news for your budget.
Cons
- Not always cheap: While short-term installment plans are appealing, long-term BNPL offers may come with excessively high APRs. Plus, some charge late fees and convenience fees that will add to your costs.
- No credit-building potential: Even if you've used BNPL plans for a few years, credit bureaus don't usually see that usage, so there's no way to prove how responsible you are with credit. If you miss a few payments with a BNPL plan, you might wind up hurting your score.
- Potential for spending more than you planned: BNPL companies promise retailers higher purchase prices and encourage consumers not to leave unpurchased items in their shopping carts. The appeal of smaller monthly payments might lure you into overspending.
When should you use a BNPL app?
BNPL apps can be a good fit if you don't have a credit history to qualify for a credit card. Buy now, pay later plans have less strict credit requirements and some require no credit checks to get approved for a loan.
If you have a lower credit score, there are other options that can help you improve your credit, such as a secured credit card or tools like Experian Boost.
Still, you may not have time to work on your credit if you have an immediate need. If that's the case, a BNPL app can be a helpful tool for buying something essential that you can't afford to cover with your next paycheck.
How to choose the right BNPL service
BNPL services can be an effective way to spread the cost of a purchase over time, but the options vary and there is not a one-size-fits-all approach.
While pay-in-four plans will be the best option to keep your fees low, you may need more time to spread the payments out without stretching your finances too thin.
Some services only offer short windows. Afterpay, for example, only offers six- and 12-month plans, while Affirm's plans stretch as long as 60 months. Longer plans will likely come with higher price tags.
You don't have to limit your search to BNPL names like Affirm and Klarna. In some cases, traditional credit card issuers are offering BNPL plans to existing customers. Some options include Citi Flex Pay, Chase My Plan and Amex Plan.
FAQs
How does a BNPL app differ from a credit card?
BNPL apps are installment loans, while credit cards are revolving loans. Between those two, revolving loans come with a higher risk of a debt spiral.
When you make a purchase with a BNPL app, you agree up front to pay it off within a specified time frame. When you charge a purchase to a credit card, you can opt to make a minimum payment each month with no set time to pay it off.
However, BNPL plans typically don't build credit like a credit card and can sometimes come with high interest rates.
Do BNPL apps affect my credit score?
In most cases, no. While some BNPL plans perform soft credit checks, the majority of these services will not hurt your credit score as long as you make your payments on time. On the flip side, they also don't help your credit score since BNPL providers do not make regular reports to credit bureaus.
How do BNPL virtual cards work?
Virtual cards are one-time-use digital cards created in BNPL apps and stored in virtual wallets, such as Apple Pay and Google Pay, for use at select online and in-person retailers.
Virtual cards are much safer than physical cards. Even if they're hacked, your account won't be compromised, and since they're located in a digital wallet, you can't lose them. However, the real benefit of virtual cards in the BNPL world is that they're easier for merchants to adopt, giving BNPL users access to a larger pool of retailers.
Methodology
CNET reviews loan products by exhaustively comparing them across set criteria developed for each category. For buy now, pay later installment loans, we examine the availability of services, repayment plan terms, interest charged, fees charged, credit requirements, purchase limits and the amount due at the time of purchase.
Our data comes directly from the individual buy now, pay later services' terms and conditions.
Apps reviewed
- Affirm
- Afterpay
- Klarna
- PayPal
- Perpay
- Sezzle
- Splitit
- Uplift
- Zip
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.
