What to know about payment plans

Depending where someone shops online, orders can arrive on a doorstep in a matter of hours. Getting a purchase immediately can be tempting, but sometimes seeing the full price at checkout can stop someone in their tracks. Paying for a big-ticket item all at once can be daunting, even when it fits in someone’s budget.

That may explain why more than one out of every three online shoppers uses a payment plan like buy now, pay later (BNPL).1 By 2026, experts predict that more than 100 million online shoppers — or almost 40% of all U.S. consumers — will choose BNPL as a payment option, up from 88.2 million in 2023.1

So, what is a payment plan, and why are an increasing number of shoppers using them to complete transactions?

Read on to learn what to know before making a purchase online with a payment plan.

Types of payment plans

When it comes to payment plan shopping, there are different types available to choose from depending on the store and payment plan provider. The process, individual eligibility, payment schedule, fees, and other associated costs may vary.

Here are some common online shopping payment plans:

  • Buy now, pay later (BNPL). Buy now, pay later is a broad term used to describe a range of payment plans, with specifically named BNPL options — such as PayPal Pay Later — available from a variety of providers. Buy now, pay later plans typically operate like this: shoppers can make a purchase with a down payment and pay the remaining balance later in installments, usually within weeks or months. Depending on the provider, BNPL options can sometimes come with no interest added.

Below are some popular versions of buy now, pay later plans, though some retailers or stores that offer these kinds of payment plans may not necessarily refer to them as “buy now, pay later” plans.

  • Monthly payments. This is where a shopper pays a fixed amount each month until the payment is paid off. Make note that this option may include interest fees, depending on the specific loan terms.
  • Biweekly payments. With biweekly payment plans, the shopper pays a set amount every two weeks until the purchase is paid off. For example, with Pay in 4 from PayPal, the shopper would make a down payment and then three interest-free biweekly payments to pay off the purchase.2

What can be purchased with a payment plan?

A payment plan can be used to complete a variety of purchases, as long as the retailer being shopped with offers it as a payment method.

From costly items like electronics, furniture, or even a new AC unit to vacations, fitness equipment, and clothing, payment plan shopping can apply to many different things.

Here are some example purchases that can be made with a payment plan:

  • Furniture
  • Clothing
  • Appliances
  • Jewelry
  • Electronics
  • Vacations and travel
  • Home improvement projects
  • Wedding expenses
  • Sporting goods
  • Concert tickets

Where can payment plans be used to shop online?

Many ecommerce and brick-and-mortar retailers offer payment plans at checkout as a payment method.

That said, there are dedicated payment plan providers that partner with online retailers to offer BNPL options.

Shopping online with a payment plan

Shopping online with a payment plan can be a helpful way to break up a larger purchase into several smaller payment installments. Payment plan shopping may also help shoppers budget for expenses by spreading out the payments.

Considerations when choosing a payment plan

There are many payment providers to choose from. Here are some best practices when considering a payment plan:

  • Carefully assess the terms and conditions, including any added fees or interest.
  • Never spend beyond your means. Don’t sign up for a weekly or monthly payment plan that one can’t comfortably afford in their budget.
  • Different options. There are many different payment plan providers available. Choose one that suits personal individual needs.
  • Read reviews. Consider reading what other shoppers have said about the payment plan provider before deciding to apply to use the payment plan.

Payment plan FAQ

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