The next time you’re whipping out your debit card to buy a comfy sweater or an exercise bike or a couch online, look closely.
You might see the option to “pay in installments,” meaning: pay in equal chunks across a series of weeks or months. Sometimes this comes with no interest or fees.
Sounds pretty sweet, right? Well, you’re not the only one who thinks so.
These so-called point-of-sale installment loans, aka “instant financing” or “buy now, pay later,” have exploded in recent years. You’ll see installment plans offered on sites from Anthropologie to Wayfair, and everywhere in between. In 2019 alone, the lender Afterpay saw its sales transactions increase by 140% — to $5.2 billion — and its user base grow to 5.2 million.
But how, exactly, do installment plans work? And are they a good idea? Keep reading to find out.
