It’s officially holiday spending season.  There’s no escaping the 9.9 sale signs everywhere – in stores, in email inboxes, in messaging apps, and notifications from mobile shopping apps.  Not to be surprised, retailers are stretching the same digit month and date sale days to boost income, with 9.9 sales now starting at 9.6, or 9.7, or 9.8, and ending all the way through 9.13.

Today I woke up to one more very tempting offer – Buy Now and Pay Next Year.  This meant I could start shopping in September through December 31, and not worry about paying for my purchases until 2025.

While installment schemes are nothing new to the Filipino consumer, Buy Now Pay Later (or Next Year) is like supersized installment.  With this offer, customers can postpone payment at a much later date, and when they start paying, they can also choose to pay on a staggered basis and even on zero interest.

So is it a good idea for your wallet?  Read on to find out.

#1 Buy Now, Pain Later

To a consumer, it may feel like a win-win situation.  You get to shop what you want now, and pay later when more convenient for you without incurring any interest.  But most consumers only pay attention to the first part of our previous sentence – shop what you want now.  Before you say yes, make sure you know the pain that’s coming in a few months or in 2025 – and that’s paying for your purchases in full or on time to avoid fees or interest.

#2 Say yes if the timing works

I have tried Buy Now Pay Later in the past because the payment timing aligned with my bonus.  In my company, we only get the 13th month pay in December, and performance bonuses are paid out (if any) between March and April.  So when I wanted to buy a new washing machine in December, I took the offer and paid the bill 3 months later, and over a 3-month period at 0% interest.  

#3 Is it really 0% interest and zero fees?    

You may ask – why are these Buy Now Pay Later companies okay with delaying payment?  After all, Buy Now Pay Later schemes do not charge any interest.  Shouldn’t they want to get paid and fast, or at least add interest? Well, among many reasons, one is that credit card and lending companies are banking on you not being able to pay your bill on time.  And if you read the terms and conditions (which you should always do), if you miss a payment, then the balance can now be charged with interest, and that’s when they can make money.

#4 Say no if you have unpaid balance on your credit card

The Buy Now Pay Next Year promotion came from a credit card company, and I don’t recommend taking their offer if you have unpaid balance on your credit card.  Pay off that balance first before taking out another loan.  You may argue that Buy Now Pay Later is not really a loan because there is no interest, but in the event you are unable to pay on time and in full, it automatically becomes a loan, and added to your growing debt.

#5 Save yourself from Buy Now, Cry Later

Buy Now Pay Later should not be an excuse to overspend.  So before you dive into holiday shopping, make a budget and stick to it.  It’s getting more and more convenient to avail of these installment schemes because they are now offered not just by credit card companies but also by lending apps like Atome and mobile wallets like GCash.  It has become so easy to avail of them that they encourage bigger spending.  But note that you are taking a risk of paying interest and fees if you run short of cash when payment is due.

ABOUT THE AUTHOR

Aneth Ng-Lim returns to writing after more than two decades of working as a communications specialist in the government and the private sector. Her advocacy for financial inclusion and personal finance began when she served as head of Consumer Education during her stint at a multinational bank.