Millions owe buy now pay later fee – the secret programs that can wipe out your debt

MILLIONS of Americans are struggling to overcome debt, and a popular payment option may be causing more issues.

The popularity of buy now, pay later (BNPL) plans have skyrocketed in recent years among consumers.

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BNPL, or point-of-sale loans, allow a buyer to pay for goods over a period of set installments while still getting the product the want up front, right away.

Installments to pay off the item are also typically interest free, so long as they are made on time, making them more appealing than putting another purchase on the credit card.

While the concept itself isn’t necessarily new, as it’s been known as “layaway” in the United States or “lay-by” in countries like Australia, there are more BNPL platforms and applications than ever, per CBS News.

They’re also incredibly easy to access, typically having a widget near the checkout button on a retailer’s website.

The coronavirus pandemic particularly helped known BPNL firms like Afterpay, Affirm, and Klarna, grow fast as many consumers were spending time at home and shopping online, as noted by CNBC.

In an ideal world, BNPL allows the shopper to get what they need right away while paying for it in a way that supports their budget.

Except, a top critique of BNPL is that it could encourage some to spend more on items than they can afford.

According to recent data from LendingTree, defaults for the payment option are climbing, and at least 40% of users have been late on an installment at least one time this year.

This is up from 34% in 2024, and defaults from BNPL can be sold to debt collectors if left unchecked, negatively impacting credit scores.

Fortunately, there are some ways to tackle the outstanding amounts before they’re reported as defaulted.

NEGOTIATE FIRST

First, in some cases, BNPL can be reduced through negotiations, as they are unsecured debts similar to credit cards and personal loans.

This would require consumers to contact BNPL providers to try and get a settlement amount that’s lower than the total amount owed.

Creditors and companies will only do this if a borrower cannot afford full payments, and typically offer help through payment deferrals or modified plans.

There’s a risk here though, especially with retailers that manage their own BNPL programs.

They could not negotiate at all, sending outstanding payments directly to collections or report them as defaulted.

CONSOLIDATE NOW

Debt consolidation or debt relief programs are other routes to explore.

Consolidation could be done with a personal loan and through a financial institution that offers a lower interest rate.

It could be especially useful for those trying to manage several loans along with other debt.

Applications for debt relief programs like Freedom Debt Relief, Accredited Debt Relief, National Debt Relief, and Americor could also be of assistance.

Lastly, credit counseling could help those struggling with BNPL debt.

Professionals can help create a thorough and easy-to-follow debt repayment plan including the outstanding BNPL amount.

A woman was also recently advised by an expert to “not pay until they sue” after racking up $185,000 in credit card debt.

ChatGPT also helped an American drowning in debt pay off $23,000 in a short period.