Starting this week, Apple is rolling out its version of "buy now, pay later."

Using a short-term loan to finance a small or medium purchase — Apple says Pay Later loans will be available in amounts from $50 to $1,000 — is "sold like a no-brainer" to consumers, personal finance expert Carmen Perez said. "I've heard people say it seems like free money."

Of course, there's no such thing. Compared with traditional credit cards, there are few upsides to using any "buy now, pay later" program. And evidence indicates the existence of these loans can facilitate unhealthy consumer behaviors that can trap people in debt.

Apple Pay Later is elbowing into a crowded field: AfterPay, Klarna, Affirm, Zip and similar short-term financing companies constitute a fast-growing market. There were almost 10 times as many "buy now, pay later" (often shortened to BNPL) loans issued in 2021 compared with 2019, according to a report from the Consumer Finance Protection Bureau. The total value of those loans grew from $2 billion to $24.2 billion in that time period.

"The way that 'buy now, pay later' is positioned, it doesn't seem like debt up front," said Perez, who's the creator of the budgeting app Much and part of a new women's financial education initiative from Secret Deodorant.

But it is: "That's still debt. You're still on the hook for that. And there's still negative consequences for that."

"Buy now, pay later" loans, also known as point-of-sale financing, typically appear as an option at online checkout. You're presented with the option to pay in full, or to split your purchase into installments with zero interest. A marketing professor told the Atlantic that in her consumer polling, shoppers said using a credit card makes them feel guilty, but they made no moral distinction between using BNPL and swiping their debit card for the full amount.

Apple's announcement of the service touted its benefits: "Apple Pay Later was designed with our users' financial health in mind, so it has no fees and no interest, and can be used and managed within Wallet, making it easier for consumers to make informed and responsible borrowing decisions."

And it does appear to have some benefits over competitors: Apple showed off a slick interface that lets users manage their loans and view a calendar of upcoming payments. Borrowers have to link a debit card to make repayments, so they can't get further into debt by paying off one loan with another (e.g., a credit card), a criticism the industry has faced. Loan recipients will get notifications about upcoming payments, so there's less chance of being caught off guard when payments go through. And the company says it plans to start reporting Apple Pay Later loans to U.S. credit bureaus starting this fall, which could help borrowers build credit through on-time payments.

Like every other lender in the BNPL space, Apple Pay Later loans are spread out in four installments. That number isn't a coincidence, said Tom Y. Chang, an associate professor of finance and business economics at the USC Marshall School of Business.

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