More people using Buy Now, Pay Later apps for holiday shopping

More shoppers are using a new form of layaway this holiday season.

Buy Now, Pay Later apps are installment payment plans offered at the point of purchase when you're shopping online for things like gifts, clothes, furniture, or even plane tickets online.

And many of these apps are reporting that they've more than doubled in usage since the start of the economic crisis.

"When I first heard about it, I was like, 'It's like layaway.' And I remember my mom used take me to the store when I was a kid and walk me to the back of the store to make her payments on her items," said Tonya Rapley, money expert and spokesperson for Affirm (, one of the Buy Now, Pay Later apps.

But this new twist on layaway let's you have the item at the point of purchase  and pay for it over time.


"It allows you to choose, how would you would like to pay that? Do you want to pay it back in two installments? Do you want to pay it back over the course of three months, six months, 12 months, 36 months?" explained Rapley.

Affirm is one of several of these apps that also include Afterpay, Klarna, and Quadpay.

"Most of these services say they either don't check your credit, or they just do a soft credit check, which doesn't impact your credit score. So that can make these appealing for folks who have bad credit or little credit," said Matt Schulz, credit anlyst for LendingTree.

Some apps look at your transaction history or credit usage. The better your history, the more money you can borrow and the lower your interest rate.

 Affirm, for example, charges anywhere from 0% to 30% APR.

"One of the things that really stands out about these services is they tend to be pretty transparent and pretty clear. So you tend to know exactly how many payments you're going to have and exactly how much you're going to pay," said Schulz.


Thousands of merchants, such as Sephora, Target, and Amazon, offer Buy Now, Pay Later options.

Affirm says it will send you reminders before payments are due, and does not charge late fees. Quadpay charges up to a $7 late fee, Klarna up to $35. And late payments can be reported to your credit.

"Down the line it could affect your credit rating and the ability to take advantage of any other credit you would want, so it's to your benefit to pay on time, and it's also made so easy," said Rapley.


These apps can help you keep your credit card usage down and some may help your credit score by reporting payments made. has a break down of different installment payment services.

Stores that still offer traditional layaway plans include Baby Depot, Big Lots, Burlington, GameStop, Hallmark Gold Crown, Kmart, Marshalls, Sears, TJ Maxx, and Walmart.