The buy now, pay later model to pay for gas as prices soar


“We have been working with Chevron since 2021, so this is nothing new and unrelated to the current global geopolitical situation,” Klarna said in a statement.

Yet it’s another financial strategy that consumers are using to deal with rising gas prices. As of March 22, the national average gasoline price was $4.24 per gallon, according to AAA. A year ago, the average was $2.88. In some states, the price per gallon exceeds $5. In California, the average price was $5.87, with some stations charging upwards of $6.

Prices have risen for so many things — housing, food, used cars — but the rise in the cost of gasoline has been significant, up 6.6% in February, according to the Bureau of Labor Statistics.

Payment plans have become how millions of Americans manage financially. Credit utilization is the number of people who manage to make ends meet. Nearly 40% of current cardholders have a balance on their cards, according to the latest credit card market report of the American Bankers Association.

But filling a tank of gas on an installment plan just seems too desperate. Groceries, gas, these are things you should pay with cash or debit card. That’s what I teach.

Then I had to check myself.

What would I do if money was so tight I couldn’t afford the gas to get to work that I needed to keep a roof over my head and food on the table ?

If you have a well-paying job, high gas prices are a pain but manageable. Despite your reluctance, you could eat less at restaurants or scale back your vacation plans. You can slow down, make sure your tires are properly inflated, or combine car trips around town. You can absorb the increase.

A year ago, I could fill up my 2006 Honda Odyssey for about $40. When I filled up last week, I gulped when the pump stopped at $84.35. It was like a pinch. It hurt, but the injury was not serious.

For those living on the financial edge, gas price jumps are scary because there is no cushion in their budget, no places to cut. This is the type of situation that has people turning to payday loan deals with fees equivalent to triple-digit interest rates. These short-term loans often keep people trapped in a cycle of debt.

So how bad is a buy now, pay later gas installment deal?

The use of payment plans by cash-strapped consumers has increased during the pandemic. Buy Now, Pay Later (BNPL) credit plans allow consumers to split payments for purchases, typically into four interest-free installments. Charges can only come into effect if payments are made late.

“Our products are interest-free, which means consumers don’t have to worry about accruing interest like they would on a credit card if they need more time to pay off their balance,” a company spokeswoman said in an emailed statement.

Klarna says it restricts the use of its buy now, pay later products if a customer misses a payment to prevent them from racking up debt.

“Our losses are well below the credit card industry standard,” the company said. “If someone’s situation changes, we have specialist support available (including 24/7 chat on our app or by phone) and help them find a payment plan to get them back on track. the right path.”

Even if people fall behind, Klarna says it doesn’t share account information or repayment histories with any of the national credit bureaus.

Drivers have long been able to obtain gas station-branded credit cards for refueling. People pay for gas with general purpose credit cards.

A recent Analysis of 22 cards offered by popular gas retailers, found that the typical discount was only 5 cents to 10 cents per gallon when using a gas card. Not much considering that if you have a balance, the average interest rate was 25.8%. The national average rate for all credit cards is 16.34%.

Given the choice between racking up more debt on a credit card with a double-digit interest rate or a BNPL product may be a slightly better short-term solution, says Ted Rossman, senior industry analyst for and

“It’s not ideal, but understandable,” he said. “If someone is really in this desperate situation, it’s kind of a tricky compromise. It’s good that it’s relatively short-term. I just wouldn’t want people to be fooled by the low barrier to the entrance.

The concern with BNPL is that consumers often buy more and spend more, warns the Consumer Financial Protection Bureau, which studies these products.

Don’t let the ease of buy it now, pay later for a product become a regular habit for discretionary purchases or even necessities. Don’t lose sight of what it is: a loan.


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