What is Buy Now, Pay Later and How Does It Work?

Citi^® Flex Pay, is a card benefit offered to existing eligible Citi^® credit card holders. The way this program works is the full amount of the eligible purchase will be deducted from your credit card’s available credit at the time of purchase. You can then select the transaction after it has posted to your account and create a fixed monthly payment plan. On your statement, the repayment amount will be added to your credit card’s Minimum Payment Due each month until the Flex Pay amount is paid in full.

Steps to using Buy Now, Pay Later

The steps to start using a pay over time or BNPL product can vary depending on the individual service or fintech. In general, there are 3 steps to set up a payment plan:

• Select your eligible purchase(s): Lenders may have requirements around how many purchases you can enroll in a buy now pay later plan. Qualifying transactions may range anywhere from less than $100 to thousands of dollars.
• Choose your payment option: Based on the service chosen, you may be able to choose between several payment options for your transaction. These can vary from a few weeks to several months. You will need to select the option that best fits your needs.
• Review and confirm your plan: Before finalizing any BNPL transaction, take the time to confirm your payment terms and details. Review your plan, then select “Agree and Continue”. You’re now all set! Based on your chosen service you will likely receive a confirmation email detailing your payment plan, monthly payment amount, any fees or interest being charged, when it will begin and when your plan it is expected to end.

Advantages of Buy Now, Pay Later

Provided you have the available credit upfront, the ability to pay over time with a BNPL service or benefit may help you fund medium to large purchases such as a new TV or piece of furniture. Additionally, the flexibility to pay off the purchase in several small fixed monthly payments can be useful and convenient.

With proper planning, the ability to pay for your purchase in fixed monthly payments offered by a buy now, pay later service (BNPL) may also help you budget for larger or unplanned expenses.

Buy Now, Pay Later: Common considerations

Before you choose to pay over time, you may want to consider factors like the payment plans you’re offered, how much you can reasonably afford, eligibility requirements and credit card rewards.

1. Payment plans

When you check out, you may be presented with several BNPL offers that you can choose from. These can be APR or Fee-based. While these plans can give you the flexibility you need to split up your purchase, you also need to choose what works best for you. You may want to consider how many payments you can commit to as well as the re-payment amount and frequency of your installment agreement.

2. Eligibility

To qualify for a BNPL installment plan, lenders generally check the following criteria:

• Your credit score and credit history
• The cost of your purchase
• The funds (available credit) on your payment method, such as your credit card
• Your salary or income
• Your prior history with the BNPL provider or credit card issuer, which can include how long you’ve had an account, past purchases, payment history and outstanding loans

It’s also important to note that your creditworthiness may be evaluated each time you opt to use an individual BNPL service.

If you use a pay later program through your credit card, a credit check and an application may or may not be required to get started. It’s important to check the requirements upfront.

In the case of Citi^® Flex Pay, there is no credit check or application needed since it is a benefit of your existing Citi credit card.

3. Credit card rewards

Typically, if you use a reward credit card, you may also be able to earn points, miles, cash back, or a statement credits on those purchases depending on the type of rewards your card offers.

Using Buy Now, Pay Later responsibly

The biggest factor in choosing to pay over time with a BNPL program is to make sure you responsibly manage the payments to help avoid late fees and remain in good standing with your bank or fintech. Depending on your repayment method, you may want to set a reminder to review the connected account to make sure those will go through smoothly.

Here are some other tips to keep track of your purchase made with a pay over time provider:

• Carefully review the program terms and conditions: Look for fees and interest rates so that you're aware of the scope of the repayment agreement before you finalize your plan.
• Consider how the payments fit your budget: Make sure you can afford the payments to avoid running into possible late fees and defaulting on your plan so you remain in good standing.
• Prioritize no-interest BNPL payment plans, if possible: These options may help you save on interest, compared to alternatives where the fee or APR rate may be higher.
• Limit how many BNPL plans you have at one time: This way, you may avoid potentially overstretching your personal finances and have trouble sticking to the repayment plan.

In general, some pay over time programs can provide alternative ways to pay that may make it easier to plan for certain purchases. If you use these tools responsibly, you may be able to avoid potential pitfalls while capitalizing on the benefits.

This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.