Should you prioritize “buy now, pay later” payments or credit card balances?

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We’ll show you how to make the right call.

If you’ve been spending a little more money this holiday season, you’re not alone. However, you may be sitting on a pile of various debts that are stressing you out right now. not.

Generally speaking, it’s best to focus on the highest interest debt first. However, if you owe money on a “buy now, pay later” plan or his BNPL plan, we recommend prioritizing that debt in the coming weeks. Here’s why:

I don’t want to ruin my credit score

Many consumers have started using BNPL plans to pay for their purchases. And if you signed up to shake off gifts and other expenses while on vacation, you might be on the hook for a series of short-term installments that need to be covered.

In this particular situation, paying for your BNPL plan ahead of your credit card payment may incur costs. reason? As long as you make the minimum payments on your credit card, you won’t be late or overdue from a credit check standpoint. In other words, as long as you meet your credit card minimum payment, your credit score will not be affected.

On the other hand, late payments on your BNPL plan can seriously damage your credit score. And when that happens, it can be difficult to get personal loan approval in a pinch or to borrow at an affordable price for any purpose. there is. Penalties and fees that can be avoided if you follow the terms of the contract.

Remember, BNPL plans inherently give you a limited amount of time to pay off your purchase. These plans are typically set to pay out within about 12 weeks. So even if you were forced to roll over your credit card balance for another 3 months, you’d accrue interest all that time, but since we’re only talking 12 weeks, interest might not be that high. And once you’ve paid off your BNPL plan, you can focus on getting rid of your credit card debt.

Beware of BNPL plans

BNPL plans often seem like an attractive financing option, until consumers realize how difficult it is to keep up. Next time he wants to sign up for a BNPL plan, see if he can afford to pay off the item in question in such a short time. In general, he recommends booking a BNPL plan for urgent purchases that cannot be paid immediately.

Also, if you think you can’t keep up with the BNPL plan, you might be better off using a credit card. While accruing interest is certainly not ideal, credit cards tend to give consumers flexibility in their payments. And even when money is tight, you can avoid damaging your credit score.