These Are the Best Places to Use a 'Buy Now, Pay Later' Plan

If you've bought anything online lately, you've probably seen a buy now, pay later (BNPL) option in the checkout cart. BNPL are convenient because they usually don't require a hard credit check, and you can pay for expensive purchases over time without accruing interest, as long as you make scheduled payments on time.

But there are downsides to using BNPL, including incurring late payment fees and paying significant interest if you miss payments or don't pay them in full.

Still, if you use it responsibly, BNPL can be a good option in certain situations. Here are a few places to consider using these payoff plans.

1. Appliance stores

It's never fun paying to replace a broken appliance, and they always seem to break at the wrong time. Making matters worse is that appliances are costly -- even a supposedly inexpensive refrigerator will set you back hundreds of dollars.

That's why using BNPL plans to cover the cost of expensive appliances could be a good option. For example, GE works with the buy now, pay later company Affirm to help customers finance appliances through its website. The interest rates can be as low as 0% for 18 months for those who qualify. The company says a $1,000 refrigerator would cost $83.34 per month for 12 months, with 0% interest.

2. Furniture stores

I'm currently shopping around for a new couch, hoping to find one that will last many years. The problem with the sofas I like, and most furniture in general, is that it's not cheap. BNPL could be a good option for expensive furniture that you plan to hold onto for many years, and many companies offer this payment option.

For example, Rooms To Go works with BNPL companies Klarna and Affirm and lets customers spread out their payments over time. Both BNPL companies offer plans with four interest-free payments you make every two weeks, with an additional option to finance the purchase with monthly payments.

3. Vacation booking websites

It's better for your personal finances if you have money in your savings account to pay for your vacation in full. But the average price of a week-long vacation for one person is $1,584, and that doesn't even include airfare, which means that paying it all at once can be difficult.

That's why many people choose to book their dream vacation using BNPL. Fortunately, many airlines and hotels offer buy now, pay later options. For example, Alternative Airlines partners with a handful of BNPL companies to finance flights through 650 airlines.

And Expedia gives customers the option to "book now, pay later" through Affirm, so travelers can make monthly payments on their vacation.

How to use buy now, pay later responsibly

BNPL can be a great way to cover the expense of an unexpected purchase or to spread out a costly purchase into smaller payments. But like any installment payment plan, you should keep a few things in mind before signing up for one.

• Don't take on too much debt: It can be tempting to buy something that you can't afford with a buy now, pay later plan. Even if you can handle the monthly payments, it's a good idea to be cautious about upgrading your purchase or making unnecessary purchases with a BNPL plan.
• Make your payments on time: This is the cardinal rule of using a BNPL plan. Some plans won't charge you interest or fees if you pay on time. But if you make a late payment or don't make the payment in full, you'll often incur a fee or will have to pay interest on the amount you owe.
• Avoid BNPL if you can pay in cash: When you can, it's usually best to make purchases in cash rather than finance them. There are exceptions to this, but tapping into your savings account and then building your balance back up is usually a better option.
• Don't sign up for multiple BNPL payments: This goes hand in hand with not taking on too much debt, but it's good to remember that while BNPL repayment plans are convenient, relying on multiple buy now, pay later accounts could make it more challenging to pay your purchases off on time.

Finally, it's a good idea to read through the fine print before signing up for a BNPL plan so you know all of the details about how much you'll owe for each payment, what fees you might be responsible for, and what your interest rate will be, if applicable.