Here’s a comparison of the six major BNPL services—Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip—to help you decide which might best suit your needs.

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1. Key Similarities

• Interest-Free Loans: All services offer pay-in-four loans at 0% interest.
• No Credit Impact for Approval: Applications won’t affect your credit score.
• Overspending Risk: Easy access can tempt users to overspend, with 45% of BNPL users reporting purchases they otherwise couldn’t afford.
• Limited Regulation: Little oversight, though the Consumer Financial Protection Bureau (CFPB) is investigating these services.

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2. Repayment Flexibility and Late Fees

| Service | Late Fees | Payment Flexibility |
|------------|-----------|---------------------|
| Affirm | No | Hardship assistance available. |
| Afterpay | Yes ($8 cap) | Rescheduling allowed. |
| Klarna | Yes (up to $7) | Flexible payment extensions available. |
| PayPal | No | No extensions offered. |
| Sezzle | Yes ($10 cap) | Payment dates can be rescheduled for free once per order. |
| Zip | Yes ($7) | Offers extensions with conditions. |

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3. Grace Periods

• Afterpay and Klarna: 10-day grace periods.
• PayPal: 3-day grace period.
• Sezzle: 2-day grace period.
• Affirm and Zip: No grace periods.

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4. Impact on Credit Scores

• Sezzle: Offers the SezzleUp program to build credit by reporting on-time payments. Late payments may also be reported.
• Other Services: Don’t report payments to credit bureaus but may send unpaid debt to collections.
• Affirm: Sends accounts to collections after 120 days of nonpayment.
• Others: May turn unpaid accounts over to collections but are less transparent about when.

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5. Assistance With Purchase Disputes

| Service | Refund/Exchange Help |
|------------|-----------------------------|
| PayPal | Offers purchase protection, similar to credit cards, with full reimbursement for approved disputes. |
| Sezzle & Affirm | Mediate disputes between you and the merchant. |
| Afterpay & Klarna | Temporarily halt payments during a dispute but won’t mediate with the seller. |

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Pros and Cons by Service

Affirm

• Pros: No late fees, hardship options available.
• Cons: No payment extensions; unpaid accounts sent to collections after 120 days.

Afterpay

• Pros: 10-day grace period, payment rescheduling.
• Cons: $8 late fee cap applies; doesn’t mediate disputes.

Klarna

• Pros: 10-day grace period, flexible payment extensions.
• Cons: $7 late fee, limited dispute support.

PayPal

• Pros: No late fees, purchase protection similar to credit cards.
• Cons: No payment flexibility; 3-day grace period only.

Sezzle

• Pros: SezzleUp builds credit, flexible payment scheduling.
• Cons: Late fees up to $10; credit score could be hurt by late payments.

Zip

• Pros: Payment extensions available on request.
• Cons: $7 late fee; no grace period.

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Tips for Smart BNPL Use

• Know Your Budget: Avoid BNPL if you can’t afford the purchase outright.
• Understand Terms: Be clear on late fees, grace periods, and repayment options.
• Track Payments: Missed payments can lead to fees or collections.
• Watch Your Credit: Services like Sezzle may affect your score, so use them wisely.

By understanding the differences, you can choose a BNPL service that aligns with your financial habits while minimizing risks.

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