Buy now, pay later – it sounds like a sweet deal, but how sweet is it? Retailers know a lot of metro Detroiters are on a tight budget, so they're pushing the "buy now, pay later" more than ever.
It's pretty simple. A person puts down a deposit to take home the holiday shopping, and then you finish paying your bill over time.
But, you might want to think twice before picking up something extra nice.
The plan started with big box stores, but has recently moved to also include some local stores, like Layers in Downtown Royal Oak, a clothing store that sells separates and solids.
Owner Jill Pendergast said she took a risk moving the store form its original location in Westland Mall to Downtown Royal Oak during a season where shoppers may already be strapped for cash.
"I think that a lot of people will tend to go without over the holidays you know they have to cut back on something and it isn't going to be utilities or food so it ends up being maybe gifting," she said.
To help stretch the budget, Pendergast told shoppers they can "buy now, pay later."
With the program, roughly 25% down will get you out the door with the item, and you pay the rest of the money off in separate monthly installments. It's popular online with companies like Affirm, Klarna or Afterpay, but now, brick-and-mortar stores are starting to catch on.
"It's really a fantastic way for retailers to expand their base of customers," Janell Townsen, an associate professor in marketing at Oakland University, said. "There are over 50 million adults in the united states who do not even have credit scores let alone credit or credit cards. It's an opportunity for those customers to be able to re-build their purchasing power"
But, not everyone is buying in.
"I just try to get what I can afford you know, at that moment because who knows what is going to happen in the future," one person told us.
It's not a smart move for an unsure shopper, because if you miss a payment, companies like Klarna and Afterpay will tack on a 25% interest fee. According to CreditKarma, about 1/3 of customers fall into that trap.