By Farah Akbari
The ads are everywhere: “Pay at your own pace.” “Split it into four interest-free installments.” “Shop now.”
For millions of shoppers, buy-now-pay-later options like Klarna, Afterpay and Affirm have become the preferred way to pay. These companies promise to make the shopping experience easier by letting you split your payments, avoid interest, and keep track of your purchases all in one place.
Today you can use them to pay for everything from flights to shoes to Chipotle burritos.
Sounds empowering, right?
Except it’s not. Behind their friendly designed platforms is a system that targets consumers, hurts credit scores, and encourages impulsive spending.
There is no question that buy-now-pay-later services make shopping feel easier.
You can buy what you want right away, even if you don’t have the cash up front. You can shop online or in-store and quickly check out with your item without needing a credit card. And if you’re unsure about an item, you can order it, try it at home, and return it if it does not fit right, all without actually having to pay.
Buy-now-pay-later companies make owing debt to shop sound convenient and harmless — and that is exactly what makes them so risky.
Creating an account with them basically only requires an address, a phone number, proof that you’re over 18 and a payment method.
In reality, these companies mislead the very people they attract. Their “pay over time” plan lets shoppers split a purchase into smaller monthly payments. It sounds great, but the annual percentage rate, or APR (the extra cost you pay for borrowing) can range from 0% to 36% depending on consumers’ credit score.
A 2024 study from the Federal Reserve showed that buy-now-pay-later users tend to already have low credit scores, meaning that they are least likely to qualify for 0% payment plans.
What looks like an easier way to pay ends up being more costly for target shoppers.
Their other paying options are not as harmless as they seem.
Their “Pay in 4 monthly installments” option might be interest-free, but they can collect late fees. As a user, frequent purchases made through these apps are easy to lose track of.
In a 2025 survey from LendingTree, 41% of buy-now-pay-later users reported that they missed at least one payment in the past year. Klarna, Afterpay and Affirm all report missed or late payments to credit agencies.
In the United States, where big purchases like homes and cars rely on a credit score, missing payments can negatively affect your creditworthiness — and your future plans.
We should be more worried about the psychology behind these apps.
On its website, Klarna proudly states that businesses using their service specifically see a 40% increase in order value and a 46% higher purchase frequency than the average consumer.
In other words, Klarna openly admits that their success depends on getting people to spend more through its well-developed checkout process. The overspending that these companies promote does not only harm our wallets, it also harms our planet.
Klarna’s partner network consists of 790,000 brands, Afterpay’s has 348,000 and Affirm’s has 375,000. These include fast fashion retailers like River Island, Boohoo, Asos, Missguided and Pretty Little Thing, who all produce cheap clothing that end up in landfills. For context, the fast fashion industry makes up 10% of global emissions. With the help of these apps, that rate can increase.
In September this year, Klarna raised approximately $1.37 billion through its initial public offering on the New York Stock Exchange, which made it one of the largest IPOs of 2025.
The Swedish company recently reported $903 million in third quarter revenue, over three times the number from two years ago. This growth comes at the expense of consumers.
Millions of people use buy-now-pay-later services without fully understanding their risks. What looks like convenience can leave your friends, family or even you into debt, with lower creditworthiness and future financial stress.
These companies profit from consumers’ lack of understanding.
That needs to change.
The government must enforce clearer cost disclosures, greater transparency about interest rates and stricter sign-up policies that include credit education.
As consumers, we must also do our part by thinking twice next time we shop now and pay later.
This story was originally produced by the Rhode Island Current, which is part of States Newsroom, a nonprofit news network which includes the S.C. Daily Gazette, and is supported by grants and a coalition of donors as a 501c(3) public charity.
Farah Akbari is a sophomore at Brown University studying Applied Math-Economics and International & Public Affairs. She is the founder and president of the Brown Afghan Society.
