A lot of people who bought home-exercise equipment last year switched to a different kind of consumer credit that allowed them to make the purchase on installment plans rather than with credit cards.
They made the transactions using a service called buy now, pay later, which is highly popular overseas and gaining traction in the U.S.
It is a way to make major purchases and pay it off in a set number of equal payments — such as four payments over six weeks. Some of the companies serving this market charge a fixed fee instead of interest. Some keep interest rates to a minimum. Some don't charge a fee whatsoever. An updated layaway plan.
Buy now, pay later companies have been around and gaining traction for some time, but hit triple-digit growth this holiday season, said Ted Rossman, an industry analyst at creditcards.com.
While there were some new services that debuted in 2020 — such as PayPal's Pay in 4 — most of the players have been around for a while. Even PayPal had a different buy now, pay later solution called PayPal Credit, which continues to exist.
The market leaders include Klarna, founded in 2005; Affirm, which was founded in 2012; and Afterpay, which came on the scene in 2014.
Buy now, pay later can be seen as a hybrid of debit meets credit.
Consumers can potentially get several weeks, months or even years with a 0% interest rate, which makes it the same as a debit card that gets paid over time.
