After months of scrimping and saving, my husband finally got himself a new gaming console. He had been watching the price trend and looking out for promotions to make sure he could get the best deal. When he arrived at the store, he was ready with cash to pay for it, but was not ready to hear the many Buy Now and Pay Later (BNPL) offers from several credit card companies, and even online money apps.

The offers were so good that he almost said yes, until we did the math and realized the cash price is still the best, with this purchase anyway.

But that experience reminded me of a recent survey that pointed to the normalization of debt among consumers, especially young adults. When you have a wish list of wants that range from designer clothing and accessories to the latest electronic gadgets, it is so easy to say yes (and fall prey) to BNPL schemes.

Singapore-based Milieu Insight polled some 3,000 respondents from Singapore, Malaysia, Indonesia, Thailand, Vietnam and the Philippines back in June 2023. In their survey, they looked at borrowing habits, debt types, and personal finance awareness of Southeast Asians. That study alarmingly showed that many shoppers, particularly among younger generations, have embraced the convenience offered by credit cards, particularly BNPL, as a means to manage their expenses.

If you’re one of them, you could be sliding down a very slippery debt trap. If you haven’t tried BNPL, know that it’s not all bad, but it’s also not all good.

Before you say yes to the next BNPL offer that comes your way, do the following simple math.

#1 Check the cash price versus the card price.

More often than not, the cash price is lower because the retailer will offer you a special discount for paying with cash (always ask). Consider the discount versus the total card price (meaning all the payments you will make throughout the term) and determine which one is a better deal. Be careful that you don’t just look at the small amount needed for monthly payments, but the total payments you will make, including interest if any.

#2 When is the card price the better option?

Even with a discount, cash (price) may not always be king. I would say yes to BNPL when offered at zero percent discount, and if the discount for the cash price is less than 5 percent of the total item cost. If you’re disciplined in making payments, then BNPL will afford you more flexibility, with low risk of missing payments and paying penalties and interest charges.

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#3 When card payments earn you rewards and more

Sometimes the stars in a credit card universe align and you could end up with flexible payment terms at 0% interest plus cash rebates and loyalty rewards points. There could also be a gift with purchase, if you can time your purchase right with exclusive and limited promotions.

#4 Yes to planned purchases but no to impulse buys

BNPL is actually a great financial tool for planned purchases. Say, you need a new laptop and have done your math on what you can afford to pay monthly, then go for it. But if you are using BNPL for unplanned purchases and impulse buys, especially lifestyle items that are wants and beyond your means, you may be borrowing trouble too.

#5 Look into the penalties for missed payments

During the sales pitch, all you will hear about are the zero percent or low interest rates. But what happens when you miss a payment? Read the fine print of your credit card terms and conditions to discover how painful that could be. A 3 percent monthly add-on rate on your purchase is not a debt you want to carry month to month.

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Most say yes to BNPL because they like the Buy Now portion. But don’t you lose sight of the Pay Later. You will have to pay for all the purchases at some point. BNPL gives you and your wallet some breathing room, which can be useful for example during the holidays when there are more expenses than usual, but the day of payment will still come. So make sure you can meet the payments when the time comes.

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