Financing Holiday Purchases: Buy Now, Pay Later vs. Credit Union Loans

Financing Holiday Purchases: Buy Now, Pay Later vs. Credit Union Loans

As we eagerly anticipate the holiday season, budget strains can be a concern for many consumers.

While some diligent budgeting can alleviate the financial burden somewhat, some may still consider borrowing to cover their holiday expenses. One increasingly popular choice in this regard is the Buy Now, Pay Later (BNPL) payment option. BNPL has seen noticeable adoption among people engaging in festive shopping sprees across physical stores and online platforms. Unfortunately, more than 40% of borrowers who use BNPL services were behind on their payments, according to a Harris Poll survey for Bloomberg News.

The potential drawbacks and hidden costs associated with BNPL underscore the need for responsible financial solutions. This presents an opportunity for credit unions to offer an alternative to prospects and members alike to drive acquisition ahead of the holiday season.

In this blog, we take a look at the key considerations for this upcoming holiday season and explore the advantages credit union loans can present over BNPL.

What Is “Buy Now, Pay Later”?

BNPL is a convenient payment option because it extends beyond the purchase of regular items like clothes and electronics to cover a range of products, including holiday packages and home appliances. BNPL services breaks down a substantial payment into smaller, more manageable units through an instalment loan. This allows consumers to gain immediate access to a product or service they cannot purchase through traditional means.

This short-term loan typically involves fixed, predetermined payments with minimal to no interest, enabling consumers to pay off the item over a few weeks or months. Referred to as a point-of-sale loan or an unsecured loan, the option has gained popularity due to its lack of collateral requirements and its availability at a growing number of retailers amidst increasing inflation costs.

Why Credit Union Loans over BNPL

     1. Hidden Costs

While smaller items may be interest-free with BNPL, consumers may encounter application fees, account-keeping fees, or late payment fees. For larger purchases such as furniture or TVs, interest charges may apply.

Credit Union Advantage: Credit union loans offer transparency with no hidden fees or charges to members, ensuring clarity from day one.

     2. Agreement Terms

While BNPL services provide immediate gratification and flexibility, their impact on credit scores should be carefully considered. Consumers need to scrutinize the agreement terms and conditions of BNPL services as failure to adhere to them can negatively impact credit ratings.

Credit Union Advantage: Unlike BNPL, credit union loans offer fixed and member-friendly agreement terms, providing clarity and ease of repayment without placing undue financial pressure on their clients.

     3. Greater Security Regulated vs. Unregulated Providers

Before entering into an agreement, it's crucial to research whether the BNPL provider is regulated. Unregulated entities may resort to harsher debt collection methods and impose additional service costs despite a consumer’s financial difficulty.

Credit Union Advantage: Credit unions are typically regulated by the Central Bank and are required to adhere to its established guidelines. In doing so, credit unions are more likely to accommodate their members during times of financial distress.

     4. The Pitfall of Impulsive Holiday Buying

While the convenience of BNPL is undeniable, it comes with the risk of encouraging impulsive buying. Unlike credit union loans, where responsibility is shared, BNPL places the onus solely on the consumer. Practicing responsible consumption is not only financially beneficial but also contributes to a more sustainable lifestyle.

Credit Union Advantage: With credit union loans, qualified loan officers act as advisors, reducing the risk of heavy financial debt while supporting responsible consumption.

     5. Return Policies and Considerations

Returning items purchased through BNPL may not be as straightforward as traditional purchases. Different return dates, restrictions tied to payment completion, and issues arising from missed payments can complicate the return process.

Credit Union Advantage: Credit union loans ensure that returns are dealt with directly by the seller, eliminating additional parties or terms and conditions that may restrict or control the returns process.

Empowering Members through Personalized Loans: The Value of Credit Union Offerings

Credit unions can consider offering personalized financial solutions to their members, including tailored loan options that can help individuals meet their unique needs. This means that the loan amount, duration, and repayment terms are all tailored to the individual's financial situation. By taking a personalized approach, credit unions can ensure that members have access to the right resources to meet their unique needs, without the risk of taking on excess debt.


By recognizing the pitfalls of impulsive buying and the potential financial duress that can arise from BNPL, credit unions can position themselves as providers of transparent, regulated, and member-friendly financial services. With a focus on educating and empowering consumers to make informed decisions, credit unions can offer a compelling alternative to BNPL.

To deliver, analyze, and grow from personalized member engagement, schedule a demo of RESUL to learn what we can do for your credit union.


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