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Buy now, pay later with installment payment services

These payment solutions let online shoppers pay over time – often for less than a credit card


Installment plan services can be a great way to finance large purchases for a low cost, especially if you choose a structure that works with your spending habits.

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For fans of online shopping, there are more ways to pay than ever before. Alternative ways to finance your large purchases are becoming all the rage, with installment plan services leading the charge.

Such services are designed to compete with credit cards, and therefore allow customers to pay off their online purchases over time – for what is often a much lower cost. Some offer fixed fees in lieu of interest charges, while some keep interest rates to a minimum and others don’t charge a fee whatsoever.

If you have any large purchases you’d like to finance without racking up significant fees, taking advantage of an alternative payment service can be a great way to reduce your interest. Luckily, repayment terms and fees vary between these programs, so it is likely you can find one that aligns with your spending habits.

What is an installment plan?

From traditional loans to store financing, there are all kinds of alternative ways to pay for a large purchase. One option that’s been increasing in popularity is the installment plan structure. From card issuer-offered solutions like American Express Pay It Plan It to third-party services like Afterpay, there is a bevy of payment plans designed to split up your purchases over time.

With an installment plan like these, you’ll pay off your purchase in fixed, typically equal amounts over a set repayment period. Some services limit you to one repayment term – such as four payments over six weeks with Afterpay – while others allow users to pick the term that works best for them. For example, Pay It Plan it allows eligible users to choose between three different repayment periods designed to offer options for every budget.

While some installment plans charge a set interest rate, most are designed to sidestep interest with a small fixed fee. Whether this fee falls on the consumer or the merchant varies by payment program.

Popular installment plan services

Luckily for online shoppers, there is no shortage of great installment plan services out there. Each offers its own portfolio of repayment options, rates, fees and effects to your credit score, so you should carefully consider each of these factors before deciding if the plan fits into your budget.

Here’s a quick look at some of the most popular installment plan services currently on the market. Click on the name of each payment service for more details

Payment serviceRepayment termsInterest rates & feesCredit score effect
AffirmFinancing periods from 3-39 months
  • Interest rates from 0-30%
  • No late fees
  • No hard credit pull to qualify
  • Some loan payments reported to credit bureaus
Afterpay4 equal installments over 6 weeks
  • No interest or fee for plans
  • Late fees start at $8 and are capped at 25% of purchase price
No effect to credit score
KlarnaVarying by merchant:

  • 4 installments over 6 weeks
  • Finance over a set repayment term
  • Pay 30 days after purchase
  • No fee for installment plan or pay later options
  • Late fee up to $10
  • Competitive interest rates for financing terms
  • No hard credit pull to qualify for installment plans or pay later
  • Financing plan applications trigger a credit check
QuadPay4 equal installments over 6 weeks
  • No interest or fee for plans
  • Late fees start at $7 and are capped at $14
No effect to credit score
Sezzle4 equal installments over 6 weeks
  • No interest or fee for plans
  • $10 account reactivation fee and $5 payment reschedule fee (after first reschedule)
  • No hard pull to qualify for plans
  • Optional plan to report payments to credit bureaus
BreadVarying by merchant:

  • 4 equal installments over 6 weeks
  • Finance over set repayment term (3-48 months) with interest rates starting at 0%
  • No interest or fee for traditional installment plans
  • Up to 29.99% variable APR for other financing terms
  • $10 fee for late payments
  • Prequalify with no effect to credit score
  • Financing loan payments reported to TransUnion
SplititEqual installments over 3, 6, 12 or 24-month repayment periods
  • No interest or fee for plans
  • No late fees, though late payments will incur interest at the rate defined by your linked credit card
No effect to your credit score
American Express Pay It Plan ItCombine up to 10 purchases to finance over a set repayment term (3-24 months)
  • No interest
  • Fixed monthly and plan fees
  • Plans adjust your credit card balance and can reduce utilization
  • Amex payments reported to credit bureaus

The most important thing you can do before opting for one of these installment plan solutions is to add up the total cost of your purchase. While some of these services – like Afterpay and QuadPay – don’t charge you a fee and can save you over time, others can actually be costlier than putting your purchase on a credit card.

Choosing the best service for you

So how do you navigate these online payment solutions and decide which is best for you?

In many cases, you’ll be limited based on the retailer you make your purchase from. Most of these third-party services partner with select merchants to add their payment method at checkout, and you’ll have to stick with whichever one is there.

This is not true in all cases, however. QuadPay and Klarna allow users to take advantage of the payment plan with any retailers by using a virtual card number. Additionally, Affirm offers a virtual card to select users.

ServicePartner retailersSample participating merchants
  • More than 3,000 partner merchants
  • Virtual card for other purchases available to some users
  • Delta vacations
  • Expedia
  • Warby Parker
  • iRobot
  • ThredUP
  • Hundreds of partner merchants
  • Primarily fashion and beauty retailers
  • Forever 21
  • Urban Outfitters
  • Kylie Cosmetics
  • ThirdLove
  • GOAT
  • Thousands of partner merchants
  • Virtual card for other purchases
  • Superdry
  • Precision Camera & Video
  • DISH Network
  • TOMS
  • Lenovo
  • Dozens of partner merchants
  • Virtual card for other purchases
  • UGG
  • eBags
  • Sunday Morning
  • Xero Shoes
  • Inkerman
  • Dozens of partner merchants
  • Primarily fashion and beauty retailers, including smaller businesses
  • Touch of Modern
  • Brandless
  • Bellacor
  • MissFitCo
  • Wayward
  • Limited partner merchants
  • No complete list of participating retailers
  • Amore Beds
  • eLuxury
  • Dozens of partner merchants
  • Multiple furniture, technology and health retailers
  • Purple
  • Echelon Fitness
  • Braun
  • Sofa Club
  • Culinary Depot
American Express Pay It Plan It
  • Any merchant that accepts American Express
  • Purchases over $100 qualify for Plan It

Since American Express Pay It Plan It is tied to your credit card, qualifying cardholders can take advantage of any eligible purchases from merchants that accept Amex.

Watch out for how buy now, pay later services affect your credit score

Many installment payment services are designed to provide options to even those with bad credit – they won’t perform a credit check to approve you for a plan, and it won’t have any effect on your credit score. However, some plans require a soft or hard credit pull for approval, and your payments might be reported to credit bureaus.

That means that it is essential that you make all your payments on time to avoid any negative marks on your credit. Plus, if you are bad about paying back what you owe, the service is unlikely to approve you for another payment plan in the future. Buy now, pay later services are a great option for those big-ticket items you need to pay over time, but they should not be used to purchase things you cannot afford to pay off.

See related: What happens when you miss a credit card payment?

Tips for maximizing installment plan services

Once you sign up for installment plan financing, keep these best practices in mind to get the most out of the payment solution.

  • Don’t take on too many plans at once. Smaller payments can mask how much you are actually spending, and you don’t want to be stuck with more than you can pay back.
  • Know your terms and conditions. Before you accept an offer, be sure you understand any penalties (such as account closure or late fees) that come from not meeting the set terms.
  • Always make payments on time, as late fees can be steep. Plus, some services report to credit bureaus.
  • Calculate your interest and fees to make sure you are actually saving money over another payment method. You actually might save by using a credit card – especially a credit card with a 0% intro APR.
  • Make your installment payments with a credit card if the service allows it, so you can still earn rewards. Plus, you’ll add a bit more flexibility to your payments this way.
  • Keep your own payment calendar, even if you have automatic payments or notifications set up. You don’t want to miss a payment if something goes wrong.

Final thoughts

Installment plan services can be a great way to finance large purchases for a low cost. Just be sure you are using the service with interest, fees and repayment terms that align with your spending habits. While it can be tempting to jump at an offer to pay over time, you should ensure it is actually a good deal before you commit.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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