Four easy payments can feel like a gift. Here is how to make sure it stays one.
It happens every year around this time. You find the perfect gift for someone you love. You click to check out, and right under the price there is a little button. Pay in four. No interest. Just a small amount today.
It feels so easy. And that is exactly why I want us to slow down and talk about it.
I grew up in Boyle Heights, the son of a father from Tepatitlán, Jalisco, and a mother from Nogales, Sonora. In homes like ours, the holidays meant familia, food, and giving with an open heart. Generosity is one of the most beautiful things about our culture. I never want anyone to lose that. I just want your generosity to come from a plan, so the joy of December does not turn into stress in February.
So let's talk about buy now, pay later, often called BNPL, with calm and with corazón.
What the Numbers Are Telling Us
Buy now, pay later lets you split a purchase into a few payments, usually four, often without interest. The Federal Reserve uses a simple example. A $100 item becomes one payment of $25 at checkout and three more payments of $25 every two weeks.
That sounds harmless. For many people, it is. But here is what recent research shows.
A NerdWallet survey conducted by The Harris Poll in September found that 38 percent of holiday spenders plan to use buy now, pay later this season. Of those people, 38 percent already expect they will not be able to make every payment in full and on time. Think about that for a moment. Many people are planning to use it while already worried about paying it back.
The Federal Reserve's latest report on household finances found that 16 percent of adults used buy now, pay later in the past year, and about one in four of them paid late at least once. It also found that Hispanic adults were more than twice as likely as White adults to use it, 26 percent compared to 12 percent. And 11 percent of users had a payment cause an overdraft or insufficient funds fee from their bank.
That last part matters. These payments usually come straight out of your checking account automatically. If the money is not there on that day, the cost can grow quickly.
The Consumer Financial Protection Bureau has also found that many borrowers have more than one of these loans open at the same time, sometimes with different companies. Because these loans often do not show up on credit reports, nobody is adding them all up for you. That job belongs to you.
I am not sharing this to scare you. Something didn't add up for a lot of families last year, and I want this year to be different for yours.
Five Questions to Ask Before You Click "Pay in Four"
Buy now, pay later is a tool. A tool is not good or bad by itself. What matters is how you use it. Before you choose it, sit down and ask yourself these questions.
Number one. Could I buy this today with the money I have? If the honest answer is no, ask whether this gift needs to happen right now, or whether something smaller would carry the same love.
Number two. Do I already have other payments like this open? Write every one of them down on a single sheet of paper. The amounts, the dates, and which account they come from. Seeing them all together changes the conversation.
Number three. Will the money really be in my account on every payment date? Look at your calendar. Rent, car payment, and the light bill do not stop for the holidays. Neither does January.
Number four. Do I know what happens if I miss a payment? Read the terms before you agree. Late fees and bank fees are the hidden cost that turns an easy purchase into a heavy one.
Number five. Am I buying this because of a deal, or because of a need? A sale that seems too good to pass up has a way of making us spend money we never planned to spend.
If you can answer these questions with peace, you are making a decision, not a reaction. That is what financial dignity looks like.
Give With Your Heart, Plan With Your Head
Here is a simple way to start. Before you buy a single gift, decide on one total number for the whole season. Gifts, food, travel, and the parties too. Tamales are not free, and neither are the gas and the ingredients. Write that number down and share it with your partner or whoever helps run your household.
Then make your list. Who do you want to give to? What would truly mean something to them? Sometimes the most meaningful gift is time together, a handwritten letter, or a family recipe passed down with care.
If you do decide to use buy now, pay later for something important, keep it to one purchase at a time, set a reminder a few days before each payment, and finish paying it off before you start another. Direction matters more than speed.
And please, teach your kids what you are doing. When they see you set a holiday number and stick to it, you are giving them something that lasts longer than any toy. Planning is an act of love.
We were never taught how money works. That ends now. You can give generously and still start the new year standing on solid ground. Let's build this together.
Where to go from here
If you want to talk through your holiday plan with people who understand, join our free community in the Finances Con Corazón app. You can sign up at app.financesconcorazon.com, ask questions, and learn alongside other familias walking the same road.
And if you want to go deeper into how I think about money, dignity, and legacy, my book, Finances Con Corazón, is available now. I wrote it for the families I grew up around. You can get your copy here.
With commitment and corazón,
Louis
This post is for general education and is not financial, legal, or tax advice. Read the terms of any loan before you agree, and check your own situation.