Features: The Rise of Buy Now, Pay Later Plans

Chances are, while shopping at an online retailer, you might have encountered buy now, pay later (BNPL) payment options such as Klarna or Afterpay at checkout. Maybe you've even used BNPL before — after all, smoothing out a large-haul purchase over time sounds a lot nicer than paying all at once. This relatively new form of credit differs from traditional credit cards and their revolving lines of credit through its spread-out installments, usually fixed at four. BNPL requires an initial down payment with loans typically between $50 and $1,000 and is offered through specific retailers, tying it to the purchase of a particular product. The general idea has been around for a while, sharing notable similarities with layaway — a pay-over-time payment scheme that allowed consumers to reserve an item until it was paid off in full. Layaway remained popular throughout the 20th century until it started to decline in the 1980s due to competition from credit cards.