Violet, who had been saving up for a new phone, finally found the perfect one online. The phone was exactly what she wanted, but she was $100 short of the $800 price. Just as she was about to close the browser and wait until she had enough money, she noticed an option at checkout: "Buy Now, Pay Later" (BNPL). This option would allow her to split the purchase into four equal payments of $200 each, with the first payment due immediately. Tempted by the idea of getting the phone right away, Violet started thinking about what could happen if she chose to use BNPL versus waiting until she had saved up the full amount.
Stalling
Violet imagined what would happen if she decided to buy the phone now. With BNPL, she could pay just $200 upfront, and then spread the remaining $600 over three more payments, each due every two weeks. This meant she could walk away with the phone today without needing to come up with the full $800 immediately.
The idea of getting the phone right away was exciting. Her current phone was outdated and starting to malfunction, so the thought of having a new, reliable device in her hands was very appealing. Plus, the payment plan she was looking at was interest-free as long as she made her payments on time, which seemed like a no-brainer.
But then Violet considered the potential downsides. Although the payments were interest-free, missing a payment could result in late fees, and if her budget tightened unexpectedly—like if she had to pay for an emergency or lost some hours at work—those $200 payments could become a burden. She also realized that using BNPL could make it tempting to buy more things on installment plans, leading to multiple payments stacking up. This could easily overwhelm her budget, making it harder to manage her finances and potentially pushing her into debt.
Waiting to Pay the Full Amount
On the flip side, Violet thought about what would happen if she instead waited until she had saved up the full $800. This would mean delaying her purchase by a few more weeks, but she would avoid taking on any future financial obligations.
If she waited, she’d have the peace of mind that came with paying for the phone outright. There would be no ongoing payments, no risk of late fees, and no worries about how she’d manage her budget in the coming months. She could save herself the stress of having to make sure she had enough money every two weeks to cover the installments. Plus, she wouldn’t have to worry about the temptation of using BNPL for other purchases, which could easily lead to overspending.
Pros v Cons
Violet recognized that using a BNPL service could be beneficial in certain situations. If she really needed the phone urgently—for example, if her current phone broke completely and she relied on it for school and work—BNPL could be a convenient way to get what she needed without having to wait. As long as she was confident in her ability to make the payments on time and had a steady income, BNPL could be a helpful tool to manage large purchases without draining her savings all at once.
However, Violet also understood that BNPL could be risky if not used carefully. If she wasn’t sure she could comfortably afford the payments, or if her income was unstable, using BNPL could lead to financial stress. The ease of making multiple BNPL purchases could also lead to overspending, turning what seemed like manageable payments into a mountain of debt. Additionally, if she missed a payment or two, the late fees could quickly add up, negating the interest-free benefit and making the purchase more expensive than it initially appeared.
Violet's Decision
After weighing the pros and cons, Violet decided to wait and save the extra $100. While the idea of getting the phone immediately was tempting, she didn’t want to risk the potential financial strain that could come with it.
By waiting until she had the full amount, she knew she could buy the phone outright, avoiding any future payments or stress. For Violet, the short-term patience was worth the long-term financial peace of mind. However, she also recognized that BNPL could be useful in emergencies or when she was confident she could manage the payments without stretching her budget too thin.
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