If it seems like "Buy Now, Pay Later" (BNPL) is everywhere these days...that's because it is.

The relatively new payment option, which allows consumers to purchase goods or services upfront and pay for them in installments, has seen a surge in the US since 2020. During the 2023 holiday season, nearly two-thirds of consumers were offered a BNPL option when shopping online, with about one in five of them using the service.^[1]

But BNPL isn't just about retail therapy anymore. As more people look for flexible ways to manage their finances, it’s also being applied in more serious categories like healthcare bills, rent, and utility payments. This shift highlights the growing appeal of BNPL for everyday necessities, not just shopping sprees.

Let's break down the pros and cons of using Buy Now, Pay Later for these essential expenses.

The benefits of using BNPL for essentials

1. Financial relief: Unexpected medical bills or a rent hike can be a real financial burden. BNPL gives you breathing room by breaking down these hefty costs into manageable chunks, so you’re not scrambling to pay everything at once.
2. Accessibility: BNPL is often easier to get than traditional loans. Even if your credit score isn’t perfect, you might still qualify, making it a lifeline for those who need help but don’t have access to other forms of credit.
3. Interest-free periods: Some BNPL plans offer interest-free periods if you pay within a certain timeframe. This can be a smart way to manage your budget without falling into debt traps—if you’re disciplined.

...and the risks

1. Debt accumulation: It’s easy to overlook how multiple BNPL commitments can stack up. When you use BNPL for essential expenses like rent or medical bills, you’re not just borrowing for a treat—you’re borrowing for your basic needs. Missing payments could put you in a deeper hole.
2. Limited consumer protections: Unlike credit cards, BNPL plans don’t always offer the same protections if something goes wrong. If you’re using BNPL to pay for services that don’t deliver (like a medical procedure that didn’t go as planned), you might be stuck footing the bill with no recourse.
3. Encourages overspending: The ease of BNPL can lead to a false sense of financial security. When it’s available for everything from groceries to your heating bill, it might tempt you to take on more than you can handle, which can snowball into financial strain.

If you’re thinking of using BNPL for non-retail expenses, always weigh the convenience against the risks. Like with any financial tool, it’s all about balance.

Does Exhale offer BNPL?

Some of Exhale's Perks use similar methods as BNPL. For example, when you're approved for an advance, you get your advance upfront, and then pay it back over the course of your next paychecks. However, there are a few key differences that separate our Perks from BNPL:

• Exhale's Perks are offered through your employer, simplifying the application and identity verification process when it comes to applying for an advance.
• Exhale does not perform hard credit checks or report missed payments to credit bureaus, so your credit score isn't impacted.
• Exhale does not charge fees or interest on advances, whereas most BNPL providers charge late fees or interest for longer-term borrowing.^[2]
• Installments for Exhale advances are primarily paid back through paychecks, reducing the risk of falling behind on payments.^[3]

As employees' needs evolve and technology makes financial services easier, we’re always looking for ways to expand upon our current suite of Perks—which may include BNPL services in the future.

We believe Buy Now, Pay Later can be a powerful tool to help with essential expenses, when done right. We're excited to explore new possibilities in this realm, while always keeping your financial health and safety top of mind.