Apple today introduced Apple Pay Later, its highly anticipated new payment feature.
This feature allows users to split an eligible purchase into four equal installments, with zero interest over six weeks. Users can use Apple Pay online or in-app to pay through Apple Pay. Apple Pay Later is a loan that is available to a select group of consumers. It will soon be made available to all eligible customers.
Apple Pay Later was announced at the company’s Worldwide Developers Conference, June 2022. However, it suffered delays in the fall. The tech giant’s official release marks its entry into the lucrative “buy Now, Pay Later” market, which has seen a huge rise in popularity since the outbreak of the pandemic.
In a press release, Jennifer Bailey, vice-president of Apple Pay, said that there is no single way to manage finances. We are excited to offer Apple Pay Later, as many people want flexible payment options. ”
How does Apple Pay Later function?
Apple Pay Later splits your purchase into four equal payments, each due two weeks apart with the first due immediately.
If you wish to purchase $500 with Apple Pay Later, for example, you will pay $125 at the checkout. Each of the three subsequent installments, each $125, are due every 2 weeks.
This pay-in-4 loan structure is common to BNPL. Apple Pay Later is unique because it offers zero interest and has no fees. This is difficult to find among other BNPL providers. Late payments are charged by Zip, Afterpay, Klarna and Afterpay.
Apple Pay Later is available at all merchants that accept Apple Pay online or in-app.
How to Get Apple Pay Later
Apple Pay Later can be applied for in the Apple Wallet. The available loan amounts are $50-$1000
Although Apple has not disclosed a minimum credit score requirement for its products, it will perform a soft credit check to determine your creditworthiness.
BNPL applications are often short and providers may rely less heavily on credit scores to approve applicants than traditional credit. The purchase cost, available funds on the card at checkout, and any history with company are all important factors.
After approval, users can access Apple Pay Later to check out and view upcoming payments through the Wallet app. All payments must be linked to a debit or credit card. Payments will be automatically billed on the due date, but Apple promises it will send reminders.
Should Apple Pay Later be used?
Financial experts warn against BNPL options such as Apple Pay Later. They say these plans can make it easy for you to overextend your financial resources.
“That’s a dangerous thing to play with, and it can snowball very quickly,” Erik Nero, a New York-based certified financial planner, says. It’s dangerous to play with and can quickly snowball span>
Nero states that having multiple BNPL loans at once is particularly risky . It’s difficult to keep track of automatic withdrawals coming out of your bank accounts, which could lead to an overdraft charge
In March 2023, the Consumer Financial Protection Bureau published a report that showed that BNPL users are more likely to have higher credit card debts, lower credit scores and delinquencies with other credit products than those who don’t use them. In September 2022, a CFPB study had cited greater industry concerns than credit cards, such as inconsistent consumer protections. Although the CFPB suggests that there is a pending regulation, no official word has been released.
Brittany Davis is an accredited financial counselor based out of Memphis, Tennessee. She believes BNPL is a better choice than high-interest options like payday loans. However, she is concerned about how fast money is disappearing from people’s pockets.
Davis states that “the velocity of spending keeps getting faster.” It’s an interesting juxtaposition to these companies. While they offer many choices for you to spend your money, how often do you get the same chance to save ?”
Davis advises consumers to pause before they make a BNPL purchase. Consider what other bills they have coming up that month, and whether or not they are on track with their savings.
Tips to Use Apple Pay Later
Apple Pay Later is a smart way for some users to get credit at zero interest. But, here are some tips:
NerdWallet suggests that you only use BNPL for purchases that are essential and cannot be covered upfront. These products are not protected by the consumer, and there is a high likelihood of disputes or returns. It’s best to avoid using them until you have more protection.
You can easily overspend with Apple Pay Later because it breaks down your purchase into smaller amounts. Before you sign up for Apple Pay Later, set a maximum purchase amount and stick to it. Even if you have the monthly installments, don’t exceed that limit.
Pay attention to your bank account balance. Apple doesn’t charge any fees for missed payments. However, your bank may charge you an overdraft fee if your account is drawn beyond its limit. You should keep an eye on your bank account balance to ensure you have enough funds for each installment.
Don’t default on your loan. Some providers will send you to collections if you default on your BNPL loan. After a series past-due reminders that can harm credit scores,