What You Need to Know About Apple’s Buy Now, Pay Later Feature

Earlier this week, at its Worldwide Developers Conference, Apple announced the release of a new feature called Apple Pay Later — a type of “buy now, pay later” plan. The feature lets users divide Apple Pay purchases into equal installments at zero cost.

Though there have been rumors of a cooling-off period for the explosive buy now, pay later industry, Apple’s entry into the market suggests this type of short-term installment loan is here to stay. And with millions of people already using Apple Pay, more borrowers will have access to a buy now, pay later plan as the cost of goods rises and household budgets tighten.

Buy now, pay later plans can be an affordable way to borrow money, but potential users should consider the risks of taking on this type of debt.

How will Apple Pay Later work?

Apple Pay Later splits your total purchase into four equal installments repaid over six weeks, with no interest or fees, according to a news release from the company.

It’s similar to plans offered by other buy now, pay later providers like PayPal, Afterpay and Klarna. The first payment is due at checkout and the remaining three payments are due every two weeks until the loan is paid in full.

For example, if your purchase is $100, you’ll pay $25 at checkout, then have three remaining payments of $25, each due two weeks apart, for a total repayment period of six weeks.

By eliminating interest and fees, Apple is an automatic standout in the buy now, pay later space. Though few current providers charge interest on a pay-in-four plan, many charge late or missed payment fees.

To use Apple Pay Later, borrowers must first apply, which can be done when they check out with Apple Pay or through the Wallet app. Apple did not mention underwriting criteria in its news release. Still, most buy now, pay later providers do not require a minimum credit score, making it an option for bad-credit or no-credit applicants. Once users are approved and opt in to the payment plan, they can view and manage upcoming payments in the Wallet app.

Payments must be tied to a debit card, which may be automatically billed. Apple will send reminders before an autopayment is processed.

Apple Pay Later will be available everywhere Apple Pay is accepted online or in-app, according to the news release. The feature will launch with iOS16, which will be released later this year.

What to know about using a buy now, pay later plan

Most financial experts urge caution when it comes to buy now, pay later plans. Though it seems easy to spread a purchase out at no additional cost, taking on debt is risky, particularly for things you don’t need.

One of the biggest concerns around buy now, pay later plans is overspending. Charles Ho, a certified financial planner based in Folsom, California, says the instant gratification built into these plans may lead to splurges you eventually regret.

“With cash, we’re much more attuned to whether what we’re buying is worth what we’re paying,” he says. “Whereas if we don’t have that pain of paying immediately, our value radar gets thrown. We’re willing to pay more for something or even buy something we otherwise wouldn’t buy.”

It’s also easy to lose track of payments and fall behind, especially if you’re managing multiple buy now, pay later loans at a time. Though Apple may not charge a fee for failed payments, your bank or credit union most likely will if you overdraw the debit card tied to your Apple Pay Later. In addition, some buy now, pay later lenders may also report late payments to the credit bureaus, which could hurt your credit score.

Finally, there are growing concerns about the lack of regulation around buy now, pay later plans. In December 2021, the Consumer Financial Protection Bureau opened an inquiry into some of the largest providers, citing data harvesting, debt accumulation and consumer protection concerns. However, the bureau has yet to release its findings.

Ho says buy now, pay later isn’t always a bad option for those who want more payment flexibility and can afford the installments. However, he recommends taking a beat before agreeing to the loan.

“If you want to take advantage of zero interest and spread out the payments, I would say, sleep on the purchase for a night,” he says. “If tomorrow you still really want it, and you can make the payments, then go ahead.”

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The Pros and Cons of Debt Consolidation

If you have multiple streams of debt, like high-interest credit cards, medical bills or personal loans, debt consolidation can combine them into one fixed monthly payment.

Getting a debt consolidation loan or using a balance transfer credit card can make sense if it lowers your annual percentage rate. But refinancing debt has pros and cons — even at a lower rate.

Pros of debt consolidation

You could receive a lower rate

The biggest advantage of debt consolidation is paying off your debt at a lower interest rate, which saves money and could eliminate the debt faster.

For example, if you have $9,000 in total debt with a combined APR of 25% and a combined monthly payment of $500, you’ll pay $2,500 in interest over about two years.

But if you were to take out a debt consolidation loan with a 17% APR and a two-year repayment term, the new monthly payment would be $445, and you would save $820 in interest. The money you save on the lower monthly payment could also go toward paying off the loan earlier.

If you qualify for a balance transfer card, you would pay zero interest during the promotional period, which can last up to 18 months. You will likely also pay a 3% to 5% balance transfer fee.

Use a debt consolidation calculator to see your total balance, total monthly payment and combined interest rate across debts.

You’ll have just one monthly payment

Instead of keeping track of multiple monthly payments and interest rates, consolidating lets you combine the debt into one payment with a fixed interest rate that won’t change over the life of the loan (or during the promotional period, in the case of a balance transfer card).

But it’s not just about simplifying your repayments. Consolidating can give you a clear and motivating finish line to being debt-free, especially if you don’t have a debt payoff plan in place.

You could build your credit

Applying for a new form of credit requires a hard credit inquiry, which can temporarily lower your score by a few points.

However, if you make your monthly payments on time and in full, the overall net effect should be positive, especially if you’re consolidating credit card debt.

Paying off credit card balances lowers your credit utilization ratio, which is one of the biggest factors that determines your score.

Cons of debt consolidation

You may not qualify for a low rate

Balance transfer cards can be hard to qualify for and typically require good to excellent credit (690 or higher on the FICO scale).

Debt consolidation loans are more accessible, and there are loans tailored for bad-credit applicants (629 or lower on the FICO scale). But borrowers with the highest scores usually receive the lowest rates.

Unless the lender can offer you a lower rate than your current debts, debt consolidation usually isn’t a good idea. In this case, consider another debt payoff strategy, like the debt avalanche or debt snowball methods.

Borrowers looking to consolidate with a loan can prequalify with some lenders to see potential rates without affecting their credit scores.

You could fall behind on payments

Missing payments toward the new debt means that you could end up in a worse position than when you started.

For example, if you fail to pay off your balance transfer card within the zero-interest promotional period, you’ll be stuck paying it at a higher APR — potentially higher than the original debt.

If you fall behind on a consolidation loan, you could rack up late fees, and the missed payments would be reported to the credit bureaus, jeopardizing your credit scores.

Before consolidating, make sure the new monthly payment fits comfortably in your budget for the entirety of the repayment period.

You haven’t addressed the root problem

Though consolidation is a helpful tool, it isn’t a sure fix for recurring debt and doesn’t address the behaviors that led to debt in the first place.

If you struggle with overspending, consolidation could be a risky choice. By taking out a loan to pay off credit cards, for example, those cards will have a zero balance again. You might be tempted to use them before the new debt is paid off, digging you into an even deeper hole.

If you have too much debt, you may be better off consulting a credit counselor at a reputable nonprofit who can help set up a debt management plan, versus trying to tackle it on your own.

Jackie Veling writes for NerdWallet. Email: jveling@nerdwallet.com.

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Should You Choose a Point-of-Sale Loan to Gift Now and Pay Later?

A point-of-sale loan lets you break down a purchase into a series of smaller payments, so you can buy now and pay later.

In recent years, point-of-sale financing has rapidly expanded in the United States, with lenders like Klarna, Afterpay and Affirm now partnering with major retailers, including Macy’s, Bed Bath & Beyond and Walmart, to bring the option to consumers.

Choosing a point-of-sale loan can make sense if it charges zero to minimal interest and the payments don’t stress your budget. But if the interest rate is high, consider other types of loans to finance your purchase — even if they’re less convenient.

How to get a point-of-sale loan

To apply for a point-of-sale loan, you’ll need to create an account with the lender. This is usually integrated directly into your checkout experience.

Once you opt in, you’ll provide basic personal details like your name, date of birth and address. You may also be asked for your Social Security number, and most companies will perform a soft credit check, which does not impact your score.

You’ll then see the breakdown of your payment plan options. Point-of-sale loans divide your balance into installments, spread out evenly over an agreed-upon repayment term, with the first installment due at checkout.

For example, if your total is $100 with a zero-interest, two-month repayment plan that comes due every two weeks, you would pay four installments of $25. After you input your payment information and billing address, and agree to the terms and conditions, your debit or credit card will be charged for the first payment and automatically charged every two weeks until your balance is paid in full.

Just like applying for a store credit card, the whole process takes anywhere from a few seconds to a few minutes. The approval decision is instantaneous.

Depending on the financing company, interest and late fees may be applied.

Are POS loans a good idea?

Point-of-sale financing can be a good option when you need to make a purchase you can’t cover outright and the installments fit comfortably in your budget. You should also look to pay zero to minimal interest.

Consider a POS loan if:

You’re new to credit: Companies that offer point-of-sale financing have more lenient criteria when deciding whether to approve you for a loan. Though some lenders check your credit score, others focus on the funds available on your debit or credit card, the repayment term and the price of your purchase.

Some companies also report your payment history, which can help your credit score if you make all payments on time.

You’re making a big, one-time purchase: Point-of-sale loans are useful when you need to get a new mattress, piece of furniture or some other big-ticket item, but don’t have a credit card or prefer the simplicity of fixed monthly payments.

You won’t pay much interest: While some retailers may offer zero-interest rates, that won’t always be the case. For example, annual percentage rates at Affirm can be as high as 30%. To finance a purchase of $800 on a 12-month repayment plan at 25% APR, you would pay $113.68 in interest.

You can afford the payments: The convenience of point-of-sale financing may tempt you to overspend. If you carry a balance on your credit cards or have other debt, taking a loan for nonessential purchases is not a good idea.

You plan to keep the item: If you want to exchange or return your purchase, you typically have to work directly with the retailer, not the lender. If you don’t get a full refund, you may still have to pay back part of your loan or risk a hit to your credit.

Where to get a POS loan

Unlike other types of loans, you don’t need to shop around for the right lender for a point-of-sale loan. The lender is determined based on the stores you shop at, and the biggest players are Affirm, Afterpay and Klarna.

Affirm works with trendy wellness retailers like Peloton, Casper and Mirror and negotiates its loan eligibility criteria and interest rates with each individual retailer, meaning your repayment term options and interest rate can change based on where you shop. While some of Affirm’s partner stores charge zero interest, others can charge up to 30% APR. Affirm never charges late fees.

Afterpay, which partners with well-established retailers like Old Navy, Gap and Bed Bath & Beyond, offers a more straightforward model. Regardless of the retailer, you will make four interest-free installments that are due every two weeks. These installments are divided equally, though your first payment could be higher if your purchase is large.

As long as you pay on time, there are no additional fees with Afterpay. However, if your payment is not received within 10 days of the due date, you will be charged a maximum fee of $8.

Klarna differentiates itself by focusing primarily on its mobile app experience. Once you download the Klarna app, you can shop at stores like Sephora, Foot Locker and Macy’s using the Klarna payment plan — your total balance divided into four payments, paid every two weeks, with zero interest. If Klarna is unable to collect a payment after two attempts, it will charge a late fee of $7.



Late fee


0% – 30%

Varies based on retailer




4 installments, due every 2 weeks




4 installments, due every 2 weeks


Alternatives to POS loans

If you’re making a larger purchase, you may want to research what annual percentage rate you could get on a personal loan. Like a point-of-sale loan, you can pre-qualify with a lender and see your rates without affecting your credit.

If you qualify for a lower APR on a personal loan than you do on a point-of-sale loan, the personal loan will likely be the more affordable option.

If you have good or excellent credit, you could also try qualifying for a 0% APR credit card. Some cards offer an introductory period up to 18 months, during which no interest will be charged on any purchases. You may also be offered a sign-up bonus or access to a rewards program.

If a point-of-sale loan offers a similar term but with interest or fees applied, a 0% card would be the cheaper option.

Jackie Veling is a writer at NerdWallet. Email: jveling@nerdwallet.com.

The article Should You Choose a Point-of-Sale Loan to Gift Now and Pay Later? originally appeared on NerdWallet.

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