As holiday shopping reaches its annual frenzy, a financial expert from the University of Calgary is sounding the alarm on a popular but potentially perilous payment method. With consumers eager to check items off their gift lists, "buy now, pay later" (BNPL) services are seeing a significant surge in use. However, Professor Jacqueline Wilson warns that these convenient options can lead to serious financial strain for unwary shoppers.
The Allure and Hidden Costs of Deferred Payments
BNPL plans, which allow customers to split a purchase into smaller, interest-free installments, are marketed as a budget-friendly solution. Their seamless integration into online checkout processes makes them incredibly tempting during the high-pressure holiday spending period. Professor Wilson points out that the ease of use is precisely what makes them dangerous. Shoppers can quickly accumulate debt across multiple platforms without a clear picture of their total financial commitment, as these transactions often don't appear on traditional credit reports in the same way.
"It feels like free money in the moment, but it's a deferred obligation," Wilson explains. The structure can encourage overspending, as consumers may commit to payments for gifts that exceed their actual post-holiday budget. Furthermore, while many plans advertise zero interest, they frequently rely on hefty late fees and penalty charges if a payment is missed, creating a debt trap for those already facing financial pressure.
Protecting Your Financial Health This Holiday Season
To avoid post-holiday financial hangovers, Wilson advises consumers to exercise extreme caution. Her primary recommendation is to treat BNPL like any other form of credit. This means budgeting for the full amount upfront and ensuring the scheduled payments align with future income. She strongly suggests keeping a dedicated list or spreadsheet of all active BNPL plans to maintain visibility over total outstanding balances.
"The holiday spirit shouldn't lead to a January of regret and collection notices," Wilson states. She emphasizes that the short-term convenience is not worth long-term financial stress. Consumers should prioritize their overall financial health and consider saving for gifts in advance or setting strict spending limits, rather than relying on future income to fund current purchases.
A Broader Trend in Consumer Debt
This warning comes amid broader concerns about rising consumer debt levels in Canada. The proliferation of BNPL services represents a shift in how debt is accumulated, particularly among younger demographics. Financial educators and advocates are calling for clearer regulations and more transparent disclosure of terms from BNPL providers to protect consumers.
As the holiday shopping season peaks on December 16, 2025, Professor Wilson's message is clear: festive generosity must be balanced with fiscal responsibility. Understanding the full terms and potential consequences of "buy now, pay later" agreements is crucial for ensuring the new year begins on stable financial ground, not under a pile of unexpected debt.
