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Today Apple introduced its hotly anticipated new payment feature, Apple Pay Later.
The feature lets users split an eligible purchase into four equal installments with zero interest over the course of six weeks when they check out online or in-app through Apple Pay. Apple Pay Later, which is essentially a loan, is currently available to select consumers and will be released to all eligible users in the coming months.
Apple Pay Later was first announced during the company’s Worldwide Developers Conference in June 2022, but it faced delays in the fall. Its official release marks the tech giant’s entry into the lucrative "buy now, pay later" industry, which has skyrocketed since the start of the pandemic.
“There’s no one-size-fits-all approach when it comes to how people manage their finances,” said Jennifer Bailey, vice president of Apple Pay and Apple Wallet, in a company press release. “Many people are looking for flexible payment options, which is why we’re excited to provide our users with Apple Pay Later."
How does Apple Pay Later work?
Apple Pay Later divides your purchase into four equal installments, each due two weeks apart, with the first payment due immediately.
For example, if you want to make a $500 purchase with Apple Pay Later, you’ll pay $125 at checkout. The next three installments — each $125 — are due every two weeks.
This pay-in-four loan structure is common with BNPL. But Apple Pay Later sets itself apart in its combination of zero interest and no fees, which is hard to find among other BNPL providers. Klarna, Afterpay and Zip all charge fees for late payments.
Apple Pay Later can be used at any merchant that accepts Apple Pay online and in-app.
How to get Apple Pay Later
Users can apply for Apple Pay Later in the Apple Wallet. Available loan amounts range from $50 to $1,000.
Though Apple hasn’t disclosed a minimum credit score requirement, it will conduct a soft credit check as part of the application, which won't affect your score.
BNPL applications tend to be short, and providers may rely less on credit scores to qualify applicants compared to traditional credit. The cost of the purchase, the funds available on the card used at checkout and any history with the company are often considered.
Once approved, users can check out with Apple Pay Later and view upcoming payments in the Wallet app. Payments must be tied to a debit card, which will be billed automatically on the payment due dates, though Apple says it will send reminders.
Should you use Apple Pay Later?
Financial experts urge caution around BNPL options like Apple Pay Later, saying these payment plans make it easy to overextend yourself.
“I think BNPL is very popular because it appeals to basic human nature, which is to get the reward now versus later,” says Erik Nero, a certified financial planner based in Gansevoort, New York. “That's a dangerous thing to play with, and it can snowball very quickly.”
Nero says having multiple BNPL loans at one time is especially risky, since it’s hard to keep track of when automatic withdrawals are coming out of your bank account, which can lead to an overdraft fee.
The Consumer Financial Protection Bureau released a report in March 2023 that shows BNPL users were more likely to have higher credit card debt, delinquencies on other credit products and lower credit scores than nonusers. A previous CFPB study, released in September 2022, cited larger industry concerns, including inconsistent consumer protections compared to products like credit cards. The CFPB has hinted at pending regulation, but there’s no official word yet.
Brittany Davis, an accredited financial counselor based in Memphis, Tennessee, says BNPL is a better option than high-interest alternatives like payday loans, but says she worries about how quickly money is leaving people’s pockets.
“The velocity of spending just keeps getting faster,” Davis says. “It’s an interesting juxtaposition with these companies. They provide many options for you to spend, but how often are you getting that same opportunity to save?”
Davis says consumers should pause before making a BNPL purchase and consider what other bills they have coming in that month and whether they’re on track with their savings.
Tips for using Apple Pay Later
For some users, Apple Pay Later may be a smart way to access credit with zero interest, but keep these tips in mind:
Focus on necessary purchases: NerdWallet recommends using BNPL only for essential purchases you can’t cover upfront. Because of the lack of consumer protections, including recurring issues with returns and disputes, it’s best to minimize use of these products until more safeguards are in place.
Stick to a budget: Because Apple Pay Later divides your purchase into smaller amounts, it’s easy to overspend. Decide on a maximum amount for your purchase before opting in to Apple Pay Later, and don’t go above that number, even if you can afford the monthly installments.
Watch your bank account balance: Apple doesn’t charge fees for missed payments, but your bank might charge an overdraft fee if you overdraw your account. Keep an eye on your balance and make sure you have sufficient funds for each installment.
Avoid defaulting on the loan: If you default on a BNPL loan, some providers send you to collections after a series of past-due reminders, which can damage your credit score.