‘Buy Now, Pay Later’ Installment Plans Are Having a Moment Again

You’re shopping online, about to hit the checkout button, when something catches your eye. It’s an intriguing offer. Instead of buying your item the old-fashioned way with your credit or debit card, you can pay for it in an even more old-fashioned way, familiar to anyone who shopped at department stores before plastic became ubiquitous: on an installment plan.

“Buy now, pay later” programs are growing fast, both on e-commerce sites and at physical retail checkout counters in the U.S. Stores generally offer the programs through third-party financial technology companies including Affirm, Afterpay, and Klarna. Unlike credit cards, on which a borrower paying a minimum could carry a balance indefinitely, these loans are designed to be paid off in a set number of payments—often four. And they’re linked to a specific purchase rather than being a general line of credit.