3 Negative Consequences That Might Ensue in 2024 if You Pay for Christmas Gifts With a Buy Now, Pay Later Plan

At this point, many people are at the very least starting to do their Christmas shopping. And you may be hitting the stores over Thanksgiving weekend to take advantage of events like Black Friday and Small Business Saturday.

In the course of making your purchases, you may be tempted to check out using a buy now, pay later plan, or BNPL plan. Research from The Ascent from 2023 found that 35% of consumers use these plans, which is actually a decrease from previous years.

But you may want to steer clear of BNPL plans when doing your Christmas shopping. If you sign up for one of these plans, these unfortunate consequences might plague you in the new year.

1. The stress of having to make payments

If you've ever had to deal with monthly credit card payments, you know how stressful it can be to have debt hanging over your head. And because BNPL plans usually have you paying off your purchases in about three months' time, signing up now could easily mean having those payments carry over into the new year. And that's not a great way to kick things off.

You may want to resolve to save more money or meet other goals in 2023. Owing money on a BNPL plan could hinder those goals.

2. Credit score damage

Just as your credit score can take a hit if you're late paying a credit card bill, so too can serious damage occur if you fall behind on a BNPL plan payment. BNPL companies have access to the credit bureaus just like credit card companies and can report delinquent payments as they see fit.

Meanwhile, let's say you're hoping to buy a home in 2024. You'll need a good credit score to qualify for a mortgage and snag a reasonably competitive interest rate on one. As such, taking on BNPL payments right now could be risky.

3. Costly fees

A big reason consumers tend to like BNPL plans is that they don't charge interest or fees -- provided you keep up with your payments, of course. If you fall behind, you'll face a host of expenses that could effectively have you throwing your money away.

The aforementioned research piece found that 26% of respondents who use BNPL plans have had a late or missed payment. Joining their ranks could cost you big time. Some plans charge a late fee around $40, and one even charges 25% of the original price, which could result in a big hit to your personal finances if your purchase was a large one.

A better way to pay for Christmas gifts

The best way to pay for Christmas gifts is simply with cash. Or you can swipe a rewards credit card to get your points, provided you know you have the money to pay for those purchases sitting in the bank already. If you can't afford all of the items on your Christmas list, whittle down your list. Or pick up a side job and pad your personal finances to cover holiday purchases.

Whether it's a BNPL plan, a credit card balance, or some other type of loan, you really don't want to go into the new year with debt. So you're better off making changes to your shopping plans than risking that fate.