If you're a Malaysian who loves to shop, you've probably heard of "buy now, pay later" (BNPL) services. These services, also known as "interest-free" or "deferred payment" options, allow you to make purchases without having to pay for them immediately. Sounds great, right? Wrong.
Ironically enough, the team behind the saving up app Sugar initially started as a BNPL company in Malaysia called Split.
While BNPL services may seem like a dream come true for shopaholics, they can actually be a nightmare in disguise. While we did our best to make our BNPL service the most consumer-friendly, we can't say the same for the rest of them available in the market. Here are just a few reasons why you should avoid BNPL for most purchases:
BNPL is not actually interest-free. While the initial purchase may not have interest, many BNPL services charge late fees or other penalties if you fail to make your payments on time. And let's be real, who hasn't missed a payment or two in their life? These fees can add up quickly and end up costing you more in the long run. If you use a credit card to make your BNPL payments, you could also rack up compounding interest and financing charges from your bank.
BNPL can lead to overspending. When you don't have to pay for something immediately, it's easy to convince yourself that you can afford it. This can lead to impulse purchases and excess spending, which can wreak havoc on your budget and your bank account.
BNPL can harm your credit score. If you fail to make your payments on time or default on a BNPL purchase, it can negatively impact your credit score. This can make it more difficult and expensive to borrow money in the future, such as for a mortgage or car loan. While this isn't common in Malaysia, many BNPL providers have the right to report delinquent payments to credit bureaus.
In short, BNPL may seem like a convenient and tempting option, but it can actually be dangerous for your financial health. So if you want to avoid overspending, late fees, and damage to your credit score, steer clear of BNPL services. Your wallet (and your sanity) will thank you.
Save up instead, perhaps? Maybe even ahem.. use a rewarding savings app called Sugar?