The Internet Is Going Crazy For The New Apple Buy Now Pay Later Service
What’s it all about? And why you should beware.
It’s a service that Apple unveiled in Tuesday’s press release, basically a service that will allow users to spread out their payments into four parts that they’ll pay off within six weeks. It’s supposed to be interest-free loans, which will be automatically approved based on soft credit pull. Such loans will be managed directly in Apple Wallet.
The loans are to be repaid using a debit card, credit card repayment will not be allowed. It strikes me as a new way to displace credit cards, which are already notorious for having a hefty interest charge if you don’t pay back what you “borrowed” on time. I see the same catch here.
Where I see problems
Practically speaking, this will be a convenient service for people who can afford it. If you don’t have the money for something now and know that you can easily transfer money from another account or a paycheck or paid invoice, then this is a convenient solution to spread the payment burden.
However, when you are in a low-income bracket or don’t have spare cash elsewhere, this will be a rather beautiful trap that will soon start attracting its first victims. After all, people’s financial literacy isn’t the greatest. Seeing that you can have something within your reach thanks to a soft credit pull that you wouldn’t usually be able to afford can be quite an expensive experience.
The other danger is that some people will start spending more because of this. After all, you will have notionally 4x less spending at once, but it will catch up with you.
Possible impact on your credit score considers a model example where you miss a payment for Buy Now Pay Later. Thus it could show up on some global register where there will be a record of you not paying on time.
Final thoughts
I’d rather avoid this service unless you see it as an option not to have a credit card, and this is how you’d like to replace it, but keep in mind that no one knows yet what not paying your loan on time will bring. So if you earn enough, say above $50k/year, then this service may be for you, but use it with caution and keep in mind the overspending above because, after all, the moment you see 4x less spending, you will be tempted to get even what you don’t need.
If you are one of the chosen ones from the USA and you have the opportunity to try the service, I will be glad if you share your observations and experiences with this service.
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References:
- Apple Pay Later Launching ‘Soon’
- Apple launches its Pay Later service
- Apple Hub — Twitter
- Apple — HT212967
- ‘Robbing Peter to pay Paul’: Apple is the latest company offering a buy-now-pay-later option. Here are 4 reasons you should think twice before signing up.
- Apple introduces Apple Pay Later to allow consumers to pay for purchases over time
