Four easy payments sounds harmless until you’ve got five or six of them going at once. Buy Now Pay Later (BNPL) is showing up everywhere, from grocery stores to cell phone bills to hotel reservations. For military families juggling PCS costs, underemployment, and yo-yoing budgets, it can seem like an easy way to get what you need now and pay later. But underneath that convenience is a modern-day payday loan, just polished up and repackaged for the digital age.
I’m not a fan of Buy Now Pay Later, and I believe the military community should avoid these loans whenever possible. If you don’t have the money to buy something right now, you can’t really afford it, and you’d be better off saving for it or deciding if it’s something you really need at all.
The fact that BNPL is so easy to use and available everywhere should be a red flag. On top of that, missed payments can hurt your credit, and it’s easy to lose track of multiple BNPL loans, which can quietly and quickly overextend your budget. For military families who already face unique financial challenges like PCS moves, deployments, and income gaps, BNPL can create more risk than reward.
In this article, I’ll break down why these loans (yes, they are loans) can be dangerous, how they impact your credit, and why military families should think twice before using them.
What Is Buy Now Pay Later?
Buy Now Pay Later (BNPL) is a type of short-term loan that allows you to split a purchase into smaller, fixed payments, often biweekly, with little to no interest if paid on time. Popular providers like Affirm, Klarna, and Zip have made it easy to finance almost anything at checkout.
Here’s how it typically works:
You buy a $200 item and pay $50 today, followed by three more payments of $50 every two weeks. That’s the standard “pay-in-4” model, and if you make every payment on time, it’s usually interest-free.
But here’s the catch: it can quickly spiral. Many service members and military spouses use BNPL for multiple purchases, Uber Eats, new clothes, pet supplies, or travel, without realizing they’ve taken on several new bills all at once. And if you miss a payment, you could get hit with a late fee of $7 to $10 per payment.
If you choose a longer-term BNPL plan, interest may be added from the start, sometimes up to 30% APR. That $200 item could end up costing much more over time. Even worse, missed payments can lead to collections or negatively impact your credit. What seems like a simple convenience can quietly derail your budget.
BNPL: The Layaway Killer
It’s easy to confuse Buy Now Pay Later with old-school layaway, but they work very differently. With layaway, you made payments before you received the item. No debt involved. The store held your purchase until you’d fully paid for it. If you changed your mind or couldn’t finish paying, you simply didn’t get the item.
BNPL flips that model on its head. You get the item right away, and then you owe payments, which means taking on short-term debt. If you miss a BNPL payment, you could face late fees, collections, and even damage to your credit.
While BNPL might feel more modern and convenient, it brings financial risks that layaway never did. Unfortunately, BNPL has all but killed layaway. Many stores, including the Exchanges, no longer offer layaway programs. Even Amazon ended theirs at the close of 2024. Why? It’s cheaper and faster for retailers to offer BNPL than to run and staff traditional layaway.
Personally, I’m ready to start a “Bring Back Layaway” campaign!
The New Payday Loan? Rise of BNPL
BNPL may feel more modern and less shady than a payday loan, but one expert (ie, me!) is sounding the alarm. Ok, many experts are sounding the alarm, not just me. If you’re wondering why, it’s because it functions in a very similar way.
Short-Term Debt Framed as Convenience
- Both BNPL and payday loans are marketed as easy, fast, and no big deal.
- They downplay the fact that you’re taking on real debt, not just splitting a payment or bridging a gap.
Encourages Spending You Can’t Afford
- Like payday loans, BNPL enables people to buy things they don’t have the money for right now.
- This leads to a cycle of borrowing just to get through the month, especially when finances are already tight.
High Risk of Fees and Penalties
- Missed BNPL payments come with late fees, potential collections, and even credit damage, just like payday loans can spiral with rollover fees and escalating interest.
No Long-Term Financial Strategy
- Neither product helps you build wealth or financial stability. They offer short-term relief at the expense of long-term health.
- This is especially risky for military families juggling variable expenses from PCS, deployments, or transitions.
Easy to Access and Easy to Abuse
- Just like payday lenders are everywhere near military bases, BNPL is now embedded in almost every online store.
- That accessibility makes it easy to overuse, especially when you’re not tracking how many payments you’ve already committed to.
BNPL might feel more modern and tech-savvy than a payday loan, but the underlying problem is the same: it makes it easy to spend money you don’t really have and can’t afford to repay without consequences. For military families trying to stay financially prepared, BNPL can be a slippery slope.
Loan Stacking: How Debt Builds Up
Loan stacking happens when you take on multiple types of debt at once. For military families, that might look like:
- A BNPL loan for new boots
- A credit card balance from groceries or gas
- An emergency loan from an aid society
- A personal loan for home repairs
- A car loan
Individually, each debt might feel manageable. But together, they create a web of financial stress, especially if your income changes due to a military spouse’s job loss, divorce, or transition out of service.
This stacking can lead to missed payments, reduced credit scores, and a bunch of stress trying to keep track of it all. Worse, many BNPL platforms don’t show up on your regular budget or credit report, that is, until you miss a payment.
BNPL Is Now Affecting Your Credit
For years, Buy Now Pay Later (BNPL) loans flew under the radar—most providers didn’t report to credit bureaus, and your payment history didn’t show up on your credit report. But that’s changing fast.
The three major credit bureaus, Experian, Equifax, and TransUnion, are now working with BNPL providers to include this data in consumer credit files. That means on-time BNPL payments may help build your credit, but missed payments will hurt it. Unlike traditional credit cards, BNPL loans are often smaller and easier to overlook, which increases the risk of missed payments or late fees.
Credit scoring companies like FICO are also adapting to this trend. They’ve introduced updated credit score models that specifically incorporate BNPL behavior. These newer scores analyze how consumers manage multiple short-term BNPL loans, especially when many are opened in a short timeframe. While some consumers could benefit from this more complete picture, it also means BNPL habits, good or bad, will now follow you into major financial decisions.
For military families, this matters. A lower credit score doesn’t just mean higher interest rates. It can also affect your ability to rent a home, get approved for a car loan, or maintain a security clearance. In short, BNPL may seem invisible, but it’s not. What you do with these loans now can impact your financial future down the road.
Related content: The Best Way to Build Credit
Why You Should Think Twice Before Using BNPL
I hate to be the bearer of bad news, but if you can’t afford to buy something in full right now, you probably shouldn’t be using BNPL to get it.
It’s easy to justify using BNPL for essentials, like gas, groceries, or back-to-school clothes, especially when money’s tight. But those “easy” payments can pile up fast if you’re not carefully budgeting for them. And even when you are budgeting, life has a way of throwing curveballs.
If you’re facing a tough financial moment, here are some better options to consider:
- Rework your budget. See if there’s a non-urgent category (like dining out or subscriptions) you can temporarily cut to free up cash for what you need now.
- Plan ahead with sinking funds. For recurring or expected expenses (like school supplies or uniform replacements), saving a little each month adds up fast.
- Use your branch’s aid society. They may be able to help with grants or interest-free emergency loans without the risks of BNPL or credit cards.
- Talk to a financial counselor. Free, confidential support is available on base or through Military OneSource.
Sell something. Look around your home for items you no longer use and sell them on Facebook Marketplace, OfferUp, or another resale site to raise quick cash.
More related information: How to Get Free Financial Counseling in the Military Community
Wrapping Up Buy Now Pay Later
Buy Now Pay Later might seem like a harmless way to make ends meet, but for military families already balancing enough financial uncertainty, it can quietly create more stress than it solves. The risks can pile up fast and follow you far longer than that “easy” four-payment plan. Before you click “Pay Later,” take a moment to consider. Rework your budget, ask for support, and lean on the resources available to the military community. BNPL is a financial product, not a safety net. And your future is too important to hand over to a prettied-up loan button.
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Featured 📸 by Elizabeth Greenberg-Taubel
