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BNPL True Cost Calculator

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Enter your Buy Now, Pay Later plan details to find its true total cost, including any late fees.

BNPL True Cost Calculator

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Total true cost
$410.00
Per installment
$100.00
Effective annual rate
21.7%
If you pay every installment on time, most BNPL plans are genuinely fee-free - the cost shown here comes entirely from expected late fees.

The formula

Per installment = Purchase price / Number of installments Total late fees = Late fee x Payments missed Total true cost = Purchase price + Total late fees Effective annual rate = (Total late fees / Purchase price) x (52 / Plan length in weeks) x 100
Example

A $400 purchase over 4 installments (6 weeks), missing 1 payment with a $10 late fee: total cost = $410, an effective annual rate of about 21.7% - even though the plan advertises "0% interest."

Step-by-step guide

  1. Enter your purchase price and number of installments.
  2. Enter the total plan length in weeks (commonly 6 weeks for a "Pay in 4" plan).
  3. Enter the late fee amount and how many payments you realistically expect to miss.

Why "0% interest" and "effective annual rate" aren't contradictory

BNPL providers can genuinely advertise 0% interest because, technically, they don't charge interest - they charge late fees instead, and only when a payment is missed. But a late fee on a short-term plan translates into a surprisingly high rate once annualized: a $10 fee on a $400 purchase spread over just 6 weeks is a small dollar amount, but stretched out to a full year at that same rate, it's equivalent to a much higher percentage than most credit cards charge. The "0% interest" claim and a "21.7% effective rate" are both accurate - they're just describing different things: the stated rate when everything goes to plan, versus the real cost when a payment slips.

Common mistakes

Assuming BNPL is always fee-free - it genuinely is if every payment is on time, but a single missed payment on a short plan can create a surprisingly high effective rate.
Not accounting for multiple BNPL plans running simultaneously - several small "interest-free" plans stacked together can add up to a meaningful recurring payment obligation that's easy to lose track of.

Frequently asked questions

Is BNPL always more expensive than a credit card?

Not necessarily - if paid on time, BNPL is often genuinely free, which can beat carrying a credit card balance at typical double-digit APRs. The comparison flips once late fees or per-installment fees enter the picture.

Does missing a BNPL payment affect my credit score?

It depends on the provider - some BNPL services report missed payments to credit bureaus while others don't, and policies have been evolving. Check your specific provider's terms for their current reporting practice.

Why do some BNPL plans charge interest instead of late fees?

Longer-term BNPL plans (6-24 months) often work more like a traditional installment loan with a stated interest rate, unlike short "Pay in 4" plans - check which structure your specific plan uses.

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