Best Buy Now, Pay Later Apps of 2021 - Investopedia

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Final Verdict: Best Buy Now, Pay Later

Buy now, pay later apps are gaining in popularity among consumers. They can offer interest-free financing and simplified repayment structures to keep people from getting into financial trouble. Our choice for the best buy now, pay later app is Affirm. Affirm does not charge any fees, including the pesky late fees that most competitors charge. You can make payments online or in-store and choose the payment structure that works best for your finances.

Compare the Best Buy Now, Pay Later Apps

Company	Number of Installments	Interest Rate	Amount Due at Purchase	Late Fees	Popular Brands
Affirm Best Overall	Varies	0%; 10% to 30%	Varies	None	Walmart.com, Peloton, Expedia, Pottery Barn
Sezzle Best for Flexible Payment Plans	4	0%	25%	$10	Umbro, GameStop, Altitude Sports, Public Rec
Afterpay Best for Students	4	0%	25%	$10	Old Navy, Bed Bath & Beyond, Forever 21, adidas
Splitit Best for No Credit Check	3 to 24	0%	Varies	None	Echelon Fitness, GlassesUSA, REST, Instasmile
Perpay Best for Bad Credit	Varies	0%	Varies	$35	Samsung, Apple, Beats, Nintendo, Michael Kors
PayPal Pay in 4 Best for Small Purchases	4	0%	25%	Varies by state of residency	Fossil, Bed Bath & Beyond, Lands' End, ALDO
Klarna Best for Large Purchases	Up to 36 months	0% to 29.99%	Varies	First attempt is $0; Second attempt is $7	Sephora, Bed Bath & Beyond, Nike, Tommy Hilfiger

How to Choose the Best Buy Now, Pay Later App

There are many BNPL apps to choose from when buying goods and services. However, most retailers partner with just one BNPL app, so their partner may be the easiest service to work with to complete your purchase.

Assuming that you have a choice of which service to use, here's how to choose the best buy now, pay later app for your purchase.

Consider your credit score. If you have bad credit or a thin credit history, it may make sense to select a BNPL app that does not check your credit score.
Will it report to the credit bureaus? People who are working on their credit will benefit from their on-time payments if the BNPL app reports their activity to the major credit bureaus.
Where is the BNPL app accepted? When you are applying for a BNPL account, choosing one that is accepted at many of the stores you shop at will keep you from opening multiple accounts.
How much of a credit limit will you receive? The credit limits of BNPL apps vary from company to company. Depending on the size of your purchase, having a larger credit limit may make the difference between being able to complete your transaction or not.
What are the fees and interest rates charged? Review the account details to determine if there are any fees for using the service, making a payment, or other activities. Also, will you be charged interest if you make your payments on time? If so, what are the rates?

When to Use a Buy Now, Pay Later App vs. a Credit Card

While buy now, pay later apps are similar to credit cards, they each have a role to play for today's consumers. During checkout, you'll have to decide which method you want to use to complete your transaction. Here are a few situations where you'd want to use one form of payment over the other.

When to use a BNPL app:

Make purchases without a credit inquiry
Simple application with instant decision for new credit
Pay over time without being charged interest
Pay off purchases with minimum payments
Build credit without getting a secured credit card

When to use a credit card:

Special discounts for using a store-branded retail card
Earn cash back, miles, or points on your purchase
Meet a minimum spend requirement to earn a welcome bonus
Earn benefits based on your annual spending totals
Price, return, and purchase protection benefits
Receive a complimentary extended warranty
Flexibility of lower minimum payments

Not all credit cards provide these benefits, so review your credit card's benefits guide or call customer service to verify if your card does. Otherwise, it might be time to replace your credit card with one that offers better benefits.

Frequently Asked Questions (FAQs)

How Do Buy Now, Pay Later Apps Work?

BNPL apps work in coordination with the merchant that you are purchasing from. Most do not charge interest as long as you make the scheduled payments on time. If you miss a payment, you may be charged interest and a late fee. The BNPL app earns a fee from the merchant for processing the transaction, similar to how a credit card transaction works. It's a win-win situation because the customer receives their product today, the merchant makes a sale that might not otherwise have happened, and the BNPL app earns a fee for handling the financing.

Can Buy Now, Pay Later Apps Help You Build Credit?

If your BNPL app reports to credit bureaus, then your positive payment history will help build your credit score. For example, Perpay customers increase their credit score by an average of 39 points. However, many of these BNPL loans are short-term in nature and, therefore, don't create a payment history that is long enough to report to the credit bureaus.

What Credit Score Do You Need to Use a Buy Now, Pay Later Service?

There is no set credit score required to use a BNPL app. There are many BNPL apps to choose from. While some perform a soft inquiry to check your credit, many others do not require a credit check at all. Even if you have bad credit, services that do not require a credit check enable you to shop today and pay over time by using alternative methods to determine your credit limit.

For example, Zebit has a two-step underwriting process. First, they verify your identity, income, and employment to establish your initial spending limit. Then, each attempted purchase is underwritten at checkout to determine whether or not you can complete the transaction.

Methodology

To find the best buy now, pay later apps, we researched over 20 BNPL services to find those that work best for a variety of shopping goals. For our analysis, we compared ease of purchasing, interest rates, fees, credit checks, how payments are handled, and other relevant features. These data points were assigned a score and weighted based on their importance to each type of consumer. We continuously monitor data from BNPL services to update our rankings to provide our readers accurate recommendations.

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