Have 'buy now, pay later' holiday shopping regrets? You're not alone

Now that the holiday season is over, some of us have bills to pay for all those gifts and presents and now more than ever consumers are using so-called 'buy now, pay later' plans.

The plans can be beneficial if they're used correctly, but if they’re not they could end costing you money in fees and interest and could affect your credit score.

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Mary Wren said the past few months have been the happiest, but most expensive time of the year.

“If you have a family like mine, we have birthdays in October, November, December. So, it’s back-to-back. Then I’m due in January with our baby girl,” said Wren.

To make ends meet, some holidays Wren has used the buy now, pay later option at checkout. The offer is usually that you make a down payment of roughly 25 per cent of the purchase and then pay off the rest in three payments.

“They’re fronting the money to the merchant for you. So you’re paying them back in the long run,” said Wren.

Some of the plans offer no-cost or low-cost terms upfront, but when payments are due be careful as it can get very expensive if you miss a payment or have not paid in full when the promotion period ends.

Late fees can range from a few dollars to up to 25 percent of the loan amount.

• READ MORE: Expert advice on recovering from holiday spending debt

“Payments that are made late, which is 30 days or more, may get reported to the credit bureaus and negatively affect your credit score,” said Lisa Gill with Consumer Reports.

One other problem with buy now, pay later plans is that if you need to make a return, even if you send an item back, you still might have to make payments and the return process could take added weeks or even months to complete.

So, next time, consider there might be better options than the buy now, pay later plans.

Consumer Reports said first, check your wallet.

“Especially for expensive purchases, or if you think you might return something, consider using a credit card instead. Aim to pay the balance off as quickly as possible. You may earn reward points, and will have consumer purchase protections in case you have trouble with the merchant or the item you purchased. Buy now, pay later loans usually don’t offer [those benefits],” said Gill.

If you decide to buy now and pay later, see if you can pick the traditional pay-in-four plan, when you make four payments over six weeks with zero, or very small, fees as long as you pay on time.

No matter which plan you pick, Wren has some advice.

“Everything I pay is on autopay (paid by her credit card on the date it is due automatically) so it doesn’t affect my credit. So that’s good,” said Wren.