Sometimes your shopping cart total can be shocking—but you don’t want to delete anything, and you can’t pay for it upfront right now. This is a common problem that online shoppers face, and you may have noticed a new solution: an increase in buy now, pay later service options (BNPL), such as AfterPay, Affirm, and Klarna. With the click of a button, your cart total can drop to a more feasible amount.

55.8 percent of American consumers have used a BNPL service, which is up from 37.65 percent in July of 2020, according to Motley Fool. These credit companies offer consumer financing, and unlike layaway, you can receive your product before you pay it off. So, should you use a BNPL service? Here’s the analysis you need before you click buy.

What is buy now, pay later? 

First and foremost, you must be 18 or older with a credit card, debit card, or bank account to sign up. You can sign up through the company’s website for easy use at participating retailers, or you can select the convenient BNPL option during checkout.

Think of these services as a temporary line of credit that enables you to pay in installments over your chosen period. In most cases, BNPL allows you to pay off your item up to four months after the date of purchase. The size and frequency of your payments can vary. Typically, most use a default system of four payments over six weeks in two-week increments—since most people are paid on a bi-weekly basis.

The best part? Almost all these companies do no external credit checks (if anything, it’s a soft inquiry), and include no interest and no added fees if you pay on time.

What are the benefits of using these services? 

Short term, your product will ship right away, which means the traditional layaway waiting period is old news. Long term, you can plan and budget your payments over the timeline. Planned, on-time payments are good habits to practice for budgeting things like credit cards and mortgage payments. 

Are there any potential drawbacks to paying in increments? 

BNPL could seem too good to be true, and you’d be right. There should always be a financial voice of reason that sounds the alarm to keep your financial status intact.

Installment services operate similarly to credit cards or in-store financing. But they are not those. There’s no hit to your credit score when you use a service like AfterPay, but there’s also no benefit to your credit score either. So, if you’re looking for a quick way to improve your credit, this isn’t it.

There’s no interest on your payments if you make them on time, but if you’re late, the interest rates can go as high as thirty percent.

Is it for me? 

Consider the following points if you’re deciding between clicking the BNPL button or not.

• Can I truly afford this item, or am I using this to make frivolous purchases? If the latter is true, consider saving instead. You don’t need to have all the money available right now to afford something, but you do need to calculate if these payments fit your budget after your essential bills.
• Do I have existing debt? If you’re successfully paying off debt with wiggle room, you could benefit from using an interest-free service instead for planned, non-essential purchases. By doing this, you’re deciding to use a credit card only for your essentials and BNPL for fun purchases that avoid high-interest debt.
• How often would I use this? If you’re planning to use this too frequently, you can easily find yourself overwhelmed with extra payments. However, if you use BNPL relatively infrequently, you can reap the benefits of it.

BNPL is a new, trending form of payment that many people take advantage of for a wide range of products. But you should always consult a trusted financial advisor who can look at the big picture of your finances to help you decide if this is right for you.