![]() ![]() “Use the credit card directly and get those protections,” she said. If you do, you lose the protections you get from using the credit card while also opening yourself up to owing interest to the card company. ![]() Lauren Saunders, associate director at the National Consumer Law Center, advises borrowers to avoid linking a credit card to buy now, pay later apps whenever possible. Apple’s protections are offered through Mastercard. Companies can offer protections, but they don’t have to. That means you could find it more difficult to settle disputes with merchants, return items, or get your money back in cases of fraud. In the U.S., buy now, pay later services are not currently covered by the Truth in Lending Act, which regulates credit cards and other types of loans (those paid back in more than four installments). Several services allow users to defer payments in this way. ![]() If a user wishes to defer payments, or set up a different payment plan, Apple said they can contact support. In Apple’s case, the company said there will be no late fees, either flat or as a percentage - only the possibility of missed payments reported to credit bureaus, and a loss of access to the loans. If a customer misses multiple payments, they may be shut out from using the service in the future, and the delinquency could hurt one’s credit score. These can run as high as $34 plus interest. The services generally don’t charge more than a customer would have paid up front, meaning there’s technically no interest, so long as one makes the payments on time.īut if a customer pays late, they may be subject to a flat fee or a fee calculated as a percentage of the total owed. Scheduled payments are then automatically deducted from one’s bank account or charged to one’s card. This is how Apple’s product will operate as well. Some companies, such as Klarna and Afterpay, do soft credit checks, which aren’t reported to credit bureaus, before approving borrowers. Branded as “interest-free loans,” buy now, pay later services require you to download an app, link a bank account or debit or credit card, and sign up to pay in weekly or monthly installments. ![]()
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