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The holiday season.

The time of year when we’re filling our carts with thoughtful, memorable gifts for everyone on our lists. It’s the season of giving — and let’s face it, spending. So there you are, scrolling through the sales and checking off names: a new tech gadget for your partner, toys for the kids, cozy sweaters for your parents, maybe even a little something for yourself.

You load everything up in your cart, feeling pretty proud of all those thoughtful picks, and then... you see the total. Your eyes widen. The number is huge, way over budget. But then, right below the credit card button, you spot it:

"Pay just $60 today!"

A holiday miracle, right? Suddenly, you can get everything on your list without the sticker shock. Just four little payments, spread out over time. No interest. No problem.

And just like that, you’ve discovered the magic of "buy now, pay later" (BNPL) — the payment option millions of people use to tackle shopping without feeling the full financial hit upfront. Maybe you’ve noticed it (or used it!) yourself, through payment platforms such as Affirm, Klarna, or Afterpay.

But could something that seems so easy really be risk-free?

Let’s dive into the pros, the cons, and how to know when BNPL is really a gift — or a trap dressed up in holiday cheer.

Why BNPL Feels Like the Ideal Holiday Solution

As "buy now, pay later" continues to increase in popularity, I’m expecting it to be everywhere this holiday season. Why? The answer is simple: It feels like a fix for almost every holiday spending problem.

This year, Americans are expected to set new spending records, with holiday retail sales anticipated to grow as much as 3.5% to nearly $989 billion. According to Deloitte, the average shopper now plans to spend around $1,778 on gifts and holiday expenses; but a Bankrate survey revealed only 29% of holiday shoppers have a specific budget or set-aside money for holiday spending.

That gap makes it easy to see why more people are turning to BNPL to afford their perfect holidays.

Here are the biggest reasons BNPL is so appealing when budgets are tight and wish lists are long.

1) Interest-Free Payments (If You’re on Time)

Unlike credit cards, which can pile on interest if you don’t pay them off each month, many BNPL plans let you split up payments (usually four payments over a six-week period) with no interest — as long as you pay on time. It’s a huge draw for shoppers trying to avoid the extra costs that come with credit cards. BNPL gives you some of that credit card flexibility without the worry of mounting interest charges, which can feel like a holiday miracle in itself.

2) Eases the Immediate Budget Crunch

Holidays get expensive — fast. BNPL offers a way to spread out that cost a bit more, turning what would be a huge December bill into smaller payments that feel more manageable. Instead of a big upfront hit to the bank account, you’re tackling smaller chunks, letting you get those perfect gifts without an immediate budget blow.

3) Easy to Qualify

BNPL offers interest-free installment payments, often split into four parts, paid biweekly or monthly, making it easier for shoppers to manage costs. And if you’ve ever applied for a traditional loan, you know how strict credit checks can be. However, most BNPL companies only run a "soft" credit check, meaning it won’t impact your credit score. This makes BNPL especially attractive to shoppers with limited credit histories or those who want to avoid adding to their credit card balance during the holidays. With just a few clicks, you’re approved and on your way to spreading that holiday cheer.

These are the reasons BNPL is on the rise, especially during the holiday season. It’s fast, it’s flexible, and it lets you pay without feeling the full weight of holiday spending all at once. But, as with most good things, there’s a catch.

The Downsides of BNPL: What You Need to Know Before You Click "Buy"

BNPL can seem helpful, but it comes with serious risks that could lead to financial trouble once the holidays are over. Here’s what to be aware of before relying on split payments.

1) BNPL Encourages Overspending

When you’re only paying a fraction of the total upfront, it’s easy to lose track of how much you’re actually spending. A $200 gift becomes "just $50 today," making it tempting to add more items to your cart. But each of these "small payments" adds up quickly. By January, you could be juggling several BNPL payments on top of regular expenses, and without careful planning, there’s less room in the budget for unexpected expenses.

2) Missed Payments Come with Expensive Penalties

BNPL may seem like a convenient option, but missing even one payment can make it very costly. Late fees are often high — an average of $25 — and some BNPL companies will charge fees every time you miss a payment cycle. What starts as a way to avoid interest charges can end up piling on more debt if you fall behind, with each missed payment adding to your overall costs.

3) BNPL Doesn’t Build Your Credit, But It Can Hurt It

Although BNPL payments aren’t typically reported to credit bureaus, missed payments can be. If you default on a BNPL payment and it goes to collections, it will likely show up on your credit report, potentially damaging your credit score. Unlike credit cards, paying BNPL on time won’t improve your credit, but missing payments can harm it.

BNPL can make holiday shopping feel more affordable in the moment, but it also has the potential to create serious financial stress if not managed carefully. BNPL can be a helpful tool, but it can also create a budget mess if used without a plan.

A Tale of Two Holiday Shoppers

To see how "buy now, pay later" can play out, let’s look at two different holiday shoppers: Jamie and Alex. Both want to make the holidays memorable for their families, but their approaches to using BNPL lead to very different outcomes.

Jamie: Overextended and Stuck with Payments

Jamie loves the holidays and wants to get something special for everyone. She sees BNPL as a way to spread out the costs, loading her cart with a tablet for her sibling ($200), kitchen gadgets for mom ($150), toys for the kids, a designer watch for her husband, and a few stocking stuffers — $850 in total.

With BNPL, Jamie only has to pay $212 today. It feels manageable, and she’s sure that she’ll figure out the remaining payments after the holidays.

But by February, Jamie’s regular expenses are piling up alongside her BNPL payments, and a few missed due dates are adding unexpected fees to the total. Soon, Jamie is behind on multiple payments, with late fees piling up on top of the gift costs. What felt like a convenient option in December has turned into financial stress, with lingering payments and late fees hanging over them well into the new year.

Alex: A Planned Approach with Financial Cushion

Alex, on the other hand, has been saving for the holidays all year, setting aside a bit each month in a high-yield savings account (HYSA) with 4% interest. He uses his holiday fund to cover most gifts within his budget.

When he finds a beautiful necklace for his wife that’s a bit pricier than expected — $300 — he turns to BNPL. With zero interest, Alex uses BNPL to split up the payments into four, paying $75 today. He knows he can afford the rest of the payments comfortably with the money still in his holiday fund, but spreading out each payment over a period of time means he can keep earning more interest on those savings.

By planning ahead and limiting BNPL to one item he can afford, Alex enjoys the holidays without added stress. Each BNPL payment is covered, and he avoids any interest or late fees. His January budget is intact, and he starts the new year without extra debt (and a little extra money earned in interest!).

Now, obviously, I wrote these examples to be a little over the top. But slight hyperbole aside, they do show two sides of BNPL — one where it’s a helpful tool and another where it leads to unplanned debt. Used wisely, BNPL can ease holiday spending. But without a plan, it can quickly turn into more than you bargained for.

How to Use BNPL Responsibly This Holiday Season

If you’re thinking of using BNPL for holiday shopping, here’s a quick guide to keep your spending in check and avoid unwanted surprises come January.

Do: Set a holiday budget first. Decide on a total budget for holiday spending before you start adding items to your cart. This way, you know exactly how much you can afford to spend, even if BNPL makes those purchases look more manageable upfront.

Don’t: Use BNPL for everything. Avoid using BNPL on multiple items. The more BNPL plans you open, the harder it becomes to track payments and stay on top of due dates. Stick to one or two items to prevent an overload of installment payments next month.

Do: Set up payment reminders. Missed payments can add costly fees and even hurt your credit. Set up reminders in your calendar or phone for each BNPL payment, so you never accidentally miss one.

Don’t: Assume BNPL is "free." Remember that while BNPL isinterest-free, it’s still debt that requires timely payments. Be aware of late fees and know that missed payments can add up quickly, turning a manageable balance into a more significant burden.

Do: Use BNPL only if you can afford the full price. If you wouldn’t be able to buy the item outright, consider skipping it. Using BNPL when you know you can cover the full cost is a safer way to avoid potential debt issues if your budget gets tight.

Don’t: Let BNPL derail your financial goals. BNPL can make holiday shopping feel affordable now, but don’t let it interfere with other financial priorities. If it means delaying a savings goal or stretching your budget thin, it’s best to hold off.

Making the Most of the Holidays Without Sacrificing Financial Peace

The holidays are about giving, celebrating, and creating memories with those we love. And while it’s tempting to stretch our budget to make the season feel perfect, it’s important to keep the big picture in mind. Buy-now-pay-later can be a valuable tool to help spread out costs, but it’s not a magic solution — and, if overused, it can turn into a source of stress after the holidays are over.

By setting a realistic budget, using BNPL selectively, and keeping an eye on payment schedules, you can enjoy the benefits without the risks. Remember, thoughtful spending is just as meaningful as generous giving, and a financially sound start to the new year is a gift to yourself that lasts far beyond the season.

So here’s to a joyful holiday season — one that’s memorable, generous, and free of debt hangovers!