Buy now, pay later: How to use Affirm responsibly this Prime Day

It’s been almost a year since Amazon partnered with Affirm. That announcement came at the end of August 2021 — which means that Prime Day 2022 is the first Prime Day where members can “buy now, pay later.”

We’ve already seen how shoppers flock to such apps during big sales events, including PayPal’s BNPL (Buy Now, Pay Later) service surge during Black Friday 2021. We expect that the ability to pay in installments will sweeten the Prime Day prospect this year as well.

Before going from zero to feral with your Prime Day haul, there are some factors to consider about Affirm versus other BNPL apps — as well as advantages and disadvantages to using them in general.

The yassification of layaway

The appeal of BNPL apps is similar to that of layaway programs, which experienced their heyday in the ’90s until they were overtaken by credit cards. The key difference: While items on layaway are generally held until you make your final payment, tools like Affirm get you your goods right after you order. Then, you’ll choose from a selection of payment plans and pay for the item in installments.

This essentially applies the monthly car payment model to any purchase from a participating retailer — and with Amazon as one of those retailers, you could break up the payment for just about anything.

Amazon is an incredibly click-happy shopping platform even without the option of a payment plan. The sheer variety of stuff being shipped with almost no wait time means that filling your cart can feel pretty appealing. Add Affirm into the mix, and large totals get even easier to stomach.

Compared to the other big players — Klarna, AfterPay, Sezzle, etc. — Affirm does have a catch: Though it doesn’t charge late fees, it does charge interest. The rates range from 0 to 30% APR based on your credit and the number of payments you select across three to 48 months. (Different plans are available for different purchase amounts, and the minimum purchase amount to use Affirm at all is $50.) Affirm’s APR calculator can help you estimate how much interest you’ll rack up on a certain purchase, which could hit $100 or more if you get a loan for, say, a pricey piece of furniture.

Affirm’s “soft pull” to determine your credit won’t affect your credit score, but the company doesn’t promise not to report your payment history to credit bureaus. To make sure you pay on time, we recommend turning on automatic payments if you can — and confirming that your payment method won’t expire over the pay period.

When it’s wise to buy now and pay later

For some purchases, layaway-style services make sense. Breaking up the cost of big investments like a new 4K TV or robot vacuum can be easier to manage than using a credit card, and can help you avoid one big chunk of money leaving your account at once. If used responsibly, apps like Affirm can also help you work around the timing of your paycheck and monthly costs that require an up-front payment, like rent.

The wisdom of using BNPL services on necessities like groceries depends on your individual habits. While habitually funding little daily expenses (like Starbucks) with an installment app can trigger a domino effect of debt, it may not be the worst idea if you’re buying something like toilet paper in bulk.

When you shouldn’t buy now and pay later

Making a series of small payments can create the harmful illusion that you’re paying less. While that’s technically accurate (and admittedly blissful) for the first few months, you will cough up the full amount eventually. Impulse purchases that felt less risky at first might feel unnecessary once the Affirm reaper comes a few times.

So, one surefire way to avoid feeding the BNPL cycle is to consider whether you’d buy that item if you didn’t have the option to break up the payment.

Pay attention to the new tabs you open from the “explore more,” “related products,” and “customers also bought” sections. The devil on your shoulder saying “you actually need this, though” can get louder when something is on sale. Hold yourself extra accountable during big shopping events like Prime Day: You don’t want to cancel out your savings with a serotonin booster that you didn’t know existed five minutes ago.

And certainly don’t snag something just to hit Affirm’s $50 minimum.