"Four payments of $25" sounds smaller than "$100". That is the whole trick, and it is not always a trick. It is a way of paying. Here is what US officials say about it. This guide is for people who see a pay-in-four or pay-over-time option at checkout.

This is general information, not financial advice. We do not recommend using or avoiding buy now, pay later (BNPL).

Quick answer

  • Per the FTC, most BNPL plans charge some fees: per payment, for paying late or for changing the payment date.
  • Per the CFPB, missed payments can bring late fees, a frozen account and debt collection.
  • The FTC and CFPB differ on whether payments reach credit reports, so read your agreement.

How it works

You pay part of the price upfront and a third-party company manages the rest in regular payments, often by card over weeks or months. Many plans are marketed as interest-free with few fees, but the FTC says most charge some fees: per-payment, late or date-change fees. Autopay from a debit account can trigger overdraft fees, and card payments can push you over a credit limit.

Missed payments

The CFPB (reviewed 30 August 2024) says most BNPL companies charge late fees, a lender may block your account from new purchases, unpaid debt can be handed to a debt collector and may be reported to a credit reporting company, which can lower credit scores. BNPL loans generally do not require a hard credit inquiry, but qualifying for a loan does not mean you should take it.

Credit scores

The two agencies differ. The FTC says the companies that manage these plans might report your payments to the three nationwide credit bureaus, which could hurt your credit if you miss or are late with a payment, and might help if you pay on time. The CFPB says most BNPL lenders do not report your payment history to the major credit reporting companies, and that most pay-in-four products do not, so on-time payments generally will not help or hurt your scores. It adds that if you do not repay and the debt goes to a debt collector, it could be reported and hurt your scores. Read your own agreement to see what yours does.

What to check before you buy

  1. Is the total cost lower than saving up and paying cash?
  2. What happens if I pay late or miss one?
  3. What is the refund policy, and are there fees for returns?
  4. Can I get the contract in writing, with every promise in it? Keep payment records.
  5. What is the store's and the plan's reputation for returns and disputes?

The FTC says these plans also typically offer fewer protections in a dispute, and that even if you use a credit card to make payments to the plan, those protections might not extend to the original purchase. If you have a bad experience, the FTC asks you to report it at ReportFraud.ftc.gov.

This guide covers US sources only. For the UK, see our guide to what to do if a company you paid stops trading, which explains a July 2026 change to Section 75 for buy now pay later.

Last checked: 21 October 2026. General information, not legal, medical or financial advice. Sources: FTC, buy now pay later, rent-to-own, lease-to-own and layaway (March 2023; read 21 October 2026); CFPB, what if I can't pay back a BNPL loan and CFPB, BNPL and credit scores (both last reviewed 30 August 2024; read 21 October 2026).