Sezzle can be a fast, convenient, no-interest alternative to financing a purchase with a credit card. Here’s how it works – and how you can decide whether it’s right for you.
The weather’s turning colder, and that means only one thing: Winter is upon us, and with it a holiday shopping season that’s sure to look quite different from in years past.
Actually, a full 25% of consumers – a whopping 46 million people – have already started their holiday shopping this year, according to a recent CreditCards.com survey. A vast majority (71%) plan to make most of their purchases online, citing both convenience and a desire to avoid human interaction during the ongoing coronavirus pandemic.
Whatever your reason for turning to the web with your 2020 gift-giving list, chances are good that going into debt doesn’t exactly inspire visions of sugarplums. That’s where a buy now, pay later service like Sezzle can come in handy: It lets you split your shopping cart into four equal installments spread out over six weeks.
What is Sezzle?
Similar to payment platforms such as Afterpay or QuadPay, Sezzle is a fintech startup that partners with online retailers to offer short-term installment plans to shoppers in need of flexible, affordable financing that won’t break the bank.
Founded in 2016, Sezzle started as an e-commerce company specializing in bank-based payments processing that lowered fees for merchants and allowed customers to earn cash back on purchases. Since pivoting to the “buy now, pay later” model in 2017, Sezzle has grown to nearly 1.5 million active users and more than 17,600 retailers; it also boasts impressive ratings on both the App Store (4.9) and Trustpilot (4.8).
How does Sezzle work?
Sezzle is built directly into the websites of online retailers encompassing a variety of shopping categories, from activewear and accessories to home goods and electronics. When you shop at an eligible store, simply select Sezzle as your payment method at checkout. You’ll be redirected to a short application form, and if you’re approved, you’ll pay 25% of the total purchase price upfront.
The remaining 75% is spread out over equal installments (typically three), billed every two weeks until your balance is paid in full. As long as your payments are made on time, you won’t pay any interest or fees for using the service.
To open a Sezzle account, you need to:
- Be at least 18 years old
- Have a U.S. or Canadian phone number that receives texts
- Have a working email address
- Have a non-prepaid payment method, like a bank account, a debit card or a credit card (shoppers in Canada can’t use a bank account, though)
You can find a list of participating merchants on Sezzle’s website.
As an example, let’s say you want to buy this cozy-looking throw from Bellacor. The option to pay with Sezzle is listed just under the product price.
Once the item is in your cart, simply click “checkout” to proceed with your order.
Enter the requested shipping details, then click “continue to payment.” You’ll see a Sezzle banner under “other payment options.”
When you click the banner, you’re taken to the Sezzle sign-up page, where you’ll be prompted to log in to your account (or create one if you haven’t already).
Assuming you’re a new customer, you’ll provide your date of birth and other basic personal information, as well as consent to a soft credit pull (which won’t affect your credit score). Keep your phone handy – Sezzle texts you a one-time pass code to continue through the checkout process.
Sezzle’s system evaluates every order at the time of purchase based on various factors: how long you’ve been a Sezzle shopper, the number of orders you’ve repaid on time, the total amount of open orders (plus how much you still owe) and the total amount of your new purchase. If you’re approved, Sezzle immediately generates a breakdown of the order details, including your down payment and future installment amounts/due dates. You’ll also link your payment method at this time.
If you get declined the first time around, you can always try Sezzle again in the future.
Pros and cons of paying with Sezzle
Whether you plan to use Sezzle online or in a store that supports Apple Pay and/or Google Pay, consider the benefits and drawbacks before you sign up. Here’s what you should know:
- Sezzle does a soft credit pull when you place an order, so you won’t get dinged a few points over a hard inquiry.
- You can reschedule a payment once per order for no added charge.
- Because Sezzle pays for your order upfront and in full, there’s no waiting to take possession of your items like there would be with layaway.
- Automatic email and text reminders help you stay on top of your payment due dates.
- The optional Sezzle Up program can help improve your credit score by reporting your repayment behavior to the credit bureaus.
- Spending limits can vary, making it difficult to plan ahead for your purchases.
- Unlike some competitors (such as Bread and Klarna), Sezzle offers just one payment plan: four equal installments over six weeks.
- If you don’t have Apple Pay or Google Pay, Sezzle is only available online.
- Refunds for returned items are issued directly to Sezzle, which means you’ll have to wait longer for your original payment method to be credited.
- Each payment reschedule (after your first) incurs a $5 fee.
- Your account is frozen if you fall behind in payments; to make additional purchases, you’ll have to pay a $10 account reactivation fee (and bring your account current).
- Unless you join Sezzle Up, using the service won’t help you build credit.
Tips for maximizing Sezzle
If you decide to take advantage of Sezzle’s interest-free installment plan, keep the following tips in mind.
Use the right payment method
If you use a rewards credit card as your Sezzle payment method, you can earn points or cash back for your spending. But if you think there’s a chance you won’t be able to pay your credit card bill in full every month, link your Sezzle account to your debit card or bank account to eliminate the potential for interest charges.
Adjust your payment schedule carefully
If you need to reschedule a payment, be sure to select the option to automatically reschedule future payments too – otherwise, you’ll pay a $5 fee to manually reschedule them later. You’ll also need to submit your reschedule request more than 48 hours before your payment date to ensure it’s processed on time.
Resolve failed payments quickly
If a scheduled installment doesn’t go through due to insufficient funds or another reason, bring your account current within 48 hours to avoid a $10 failed-payment fee.
Keep your budget in mind
You can have multiple Sezzle installment plans at once, but don’t take on more than you can afford to pay off.
Always pay on time
This is particularly important if you’re a Sezzle Up customer, which means your payment history is reported to the credit bureaus. Paying late can also result in fees and, in some cases, account deactivation.
Sezzle can be a fast, convenient, no-interest alternative to financing a purchase with a credit card. Because the company makes money by charging merchants a percentage of each Sezzle sale, the service is fee-free to customers (provided you make all your payments on time).
That said, with only one installment plan available, you may want to look into similar options that offer multiple ways to pay. And whatever you do, don’t take on more than you can afford to pay off, particularly if you have multiple installment plans at a time.