As the holiday shopping season kicks into high gear, state officials are urging New Yorkers to think twice before using “Buy Now, Pay Later” (BNPL) financing — a fast-growing payment option that could quietly rack up serious debt.
The New York State Department of State’s Division of Consumer Protection issued a buyer beware alert this week, warning that the ease of BNPL plans can quickly spiral into late fees, financial strain, and credit damage.
The danger behind deferred payments
BNPL allows consumers to split purchases into smaller, interest-free payments over time. It’s been marketed as a convenient way to shop for everything from electronics to takeout. But officials say convenience often comes at a cost.
“Don’t get caught in the revolving door of debt this holiday season,” said Secretary of State Walter T. Mosley. “These services can make buying easy — but before they know it, the debt is growing and hurting their financial health.”
Among the concerns raised:
- Impulse shopping and overspending: Studies show BNPL increases spending more than credit cards.
- Multiple stacked loans: More than 60% of users juggle multiple BNPL plans at once, according to the Consumer Financial Protection Bureau.
- Missed payments: Late fees, penalty interest rates, and potential damage to credit scores are common consequences.
Younger shoppers at highest risk
Younger adults are the top users of BNPL services, often attracted by the easy approval process and short-term convenience. But officials warn that long-term plans often carry interest rates of 10–30%, and missing payments can quickly escalate costs.
“BNPL can create a habit of spending money you don’t actually have,” the Division stated.
Tips to stay out of the BNPL trap
State officials offered the following advice to keep consumers protected:
- Read the fine print: Understand terms, fees, interest rates, and due dates.
- Stick to a budget: Make sure payments align with your income.
- Track your accounts: Automate payments if needed to avoid late fees.
- Avoid impulse buys: Be intentional with your holiday shopping.
- Know your credit risks: Some BNPL lenders report to credit bureaus; late payments can hurt your score.
Need help?
Consumers with questions or disputes can contact the Division of Consumer Protection at 1-800-697-1220 or visit dos.ny.gov/consumer-protection.
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