Should You Buy Now, Pay Later for Back-to-School?

Inflation has been battering family budgets all summer long, and the latest line item to take a hit is school supplies.

According to the National Retail Federation, which released its annual back-to-school survey in July 2022, shoppers have been feeling the pressure, cutting back on spending in other categories and working longer hours to cover the costs of school supplies.

They’re also looking for ways to stretch their money further, but shopping sales and clipping coupons aren’t the only options anymore.

Some are turning to "buy now, pay later,” a type of payment plan available at most major retailers, to break up their back-to-school purchases, according to the survey. Though BNPL plans can come with zero interest and no fees if you pay on time, they’re still risky, and there may be better ways to manage your cash flow.

How do BNPL payment plans work?

BNPL plans vary by provider, but they all divide your purchase into smaller installments, which you pay over time.

The most popular plan is the pay-in-four, which almost every major BNPL provider offers. With pay-in-four, your purchase is divided into four equal payments. You typically make the first payment at checkout, with the three remaining payments automatically billed to your original payment method every two weeks until you’ve paid in full.

For example, let’s say you have a cart totaling $600. You’ll pay $150 at checkout, then three remaining payments — each $150 — over the next six weeks.

Popular BNPL providers like Affirm, Afterpay and Klarna don’t charge interest for using their pay-in-four plans, so if you pay on time, there’s no additional cost. If you miss a payment, some providers charge a fee, which drives up the cost of your purchase.

BNPL options are integrated directly into retailers’ websites, such as Target, Staples, Best Buy and Walmart. When shopping online, you may see the option to use BNPL at checkout. If you opt in, you’ll fill out a short application, which doesn’t include a hard credit check, so there’s no risk to your credit score.

Approval decisions are instantaneous and may depend on factors like the money available on your debit or credit card, the cost of your purchase, what store you’re shopping at and any prior history you have with the provider. Credit score isn’t usually a deciding factor in your application, so if you have fair or bad credit (689 credit score or lower), you may still be eligible for BNPL.

You can also shop in person by downloading a BNPL virtual card from the provider’s mobile app, which you scan at the register.

Should you use BNPL for school supplies?

Robert Bertman, a Clayton, Missouri-based certified financial planner who works with families, says many of his clients have used BNPL, and though it’s not automatically a bad thing, he urges caution.

Because the smaller installments make it seem like you’re spending less than you really are, it’s easy to overextend yourself.

“It’s a psychological trick,” Bertman says. “It’s disguised as trying to make things more affordable for people, but it can also make people spend more than they intended to.”

He recommends keeping the total cost of your purchase front and center by asking yourself: If you could afford to pay now, would you? Or is there somewhere else you’d rather put that money?

Andrea Woroch, a consumer finance and budgeting expert based in Bakersfield, California, says she sees people get into trouble when they try to manage multiple BNPL plans at once.

Though the payments are often small, they add up. And with more than one plan going at a time, it’s easy to fall behind or overdraw your account, which can mean late fees from the BNPL provider and penalty fees from your bank or credit card company.

If you want to use BNPL, Woroch recommends saving it for one essential back-to-school purchase, perhaps the hardest to cover outright, like a laptop or tablet. Just make sure you can afford the installments.

Other ways to save for back-to-school

If you’re looking for more ways to ease the burden of back-to-school shopping, Woroch’s top tip for parents is to shop at home first.

Reusing old folders, half-used notebooks, forgotten binders and whatever pens and markers you have lying around saves more money than you would think. It can also help kids learn the importance of money management.

“I know kids love having brand-new things, but this is a really good opportunity to teach them about budgeting,” Woroch says. “Explain to them, ‘If we reuse this backpack, we can get those sneakers you really want.’”

Plus, by delaying your shopping, you’ll miss the peak back-to-school season. When you go to restock, you’ll likely find bigger discounts, since retailers will be trying to clear their inventory.

For parents looking to cut spending across the board and make more room for seasonal expenses like school supplies, Bertman recommends counting transactions, not dollars.

For example, he often advises clients to reduce their weekly trips to the grocery store. Though the price per trip goes up, monthly spending on groceries goes down, because there’s less opportunity to overspend.

“I don’t really know anyone who gets through the store without adding extra things to their cart,” he says. “The more often we visit a place, the more likely we’re going to end up with stuff we didn’t need.”