How does PayPal's "Bill Me Later" work?

“Bill Me Later” is a service which is offered on many electronic retailers’ websites which allow their customers to have the product shipped to them now, and then pay payments for your purchase after a few months have passed.

BillMeLater is giving you credit, and just like a credit card, they have to do what's called a "hard pull" on your credit report. Hard pulls will drop your credit score roughly five points for roughly up to six months afterwards. That information isn't disclosed in their FAQ and could come as a surprise to consumers considering BillMeLater is competing in the same service market as Paypal and Google Checkout, where they want you to choose it as an alternative payment option at checkout, neither of which impact your credit report.

Essentially the “Bill Me Later” service is making use of the mentality that most Americans have of “I want it now.” No is seemingly not an answer anymore, if people want to make a purchase whether it be for a home, a car or a new computer, they’ll find a way to do it with creative financing. Saving up and paying cash for purchases is seemingly a thing of the past.

There’s nothing inherently wrong with borrowing money for some things, such as a house, however “Bill Me Later” is a dangerous game to play. If you are considering accepting their unfavorable terms, chances are you already have all sorts of consumer debt and cannot afford the purchase in the first place. You should definitely not use this service.

The terms on the service are really not very good, you’re better off using a credit card in most places. The interest rate you pay is about 20%, and they will frequently check your credit which could ding your credit score. These services should be avoided in almost all cases, they are not good for the consumer.

The only benefit of this service is to the merchants themselves. The service only charges a 1.5% fee as opposed to credit cards which charge a 3% fee for each purchase. In addition, the new payment method increases sales for the merchant because the people who use it would otherwise not be able to pay for it.

BillMeLater is like a loan shark. They want you to pay later so that they can rack up your money in finance fees. There are many horror stories about people who have been screwed over by BillMeLater. Do a google search on bill me later complaints and you will see that this is not a good way to buy anything.

Bill Me Later Complaints

You raise some good points here.