Buy now, pay later: the hidden risks

How BNPL works

Buy now, pay later (BNPL) lets you split a purchase into a few instalments or pay it in full a few weeks later, often with no interest if you pay on time. It’s offered at checkout by shopping, food and travel apps. It’s a form of credit — just a very easy one to take.

The risks

• --Late fees — miss a due date and fees or interest can apply quickly.
• --Your credit score — BNPL is credit; repayments may be reported to credit bureaus, and missed ones can hurt your score.
• --Overspending — splitting ₹3,000 into three ₹1,000 payments makes it feel cheaper than it is. Research on payment friction suggests easy payment encourages spending (cash vs UPI vs card).
• --Stacking — several small BNPL plans across apps add up to a monthly payment you never consciously chose.
• --Fewer protections in practice — returns and refunds can get complicated when a third party is involved.

If you use it, use it safely

• --Only for things you’d buy and could pay for today in full.
• --Use one BNPL provider, not several.
• --Turn on auto-pay or reminders for every instalment.
• --Log each instalment as an upcoming expense so it’s in your budget.
• --If you find yourself using BNPL for groceries or bills, treat it as a warning sign and review your budget (how to make a monthly budget).

Frequently asked questions