With credit card companies tightening approvals and slashing credit limits, even for those who can afford to use them, credit card use declined dramatically in 2009. But people still want to buy things without paying for them right away and it turned out there was already a company ready to step into the gap.

About Bill Me Later

In 2008, eBay’s Paypal company acquired Bill Me Later, a service that combines the checkout ease of PayPal with a credit card service. But unlike traditional credit cards which extend you a revolving line of credit, Bill Me Later approves the credit for each transaction. The result is something closer to a series of mini-loans.

They do this by requiring your date of birth and the last 4 numbers of your Social Security Number for each purchase and running a quick credit review. When you first open a Bill Me Later account, they make a hard pull of your credit report (like a credit card) but their FAQ implies that afterward they only review the credit report already pulled.

Because they’re owned by the same company, Bill Me Later can be connected with Paypal.

The balance is billed like a normal credit card with billing cycles and grace periods and is payable by check, online billing directly to your checking or savings account, automated phone service billing to your checking or savings account, or money order. Cash and credit cards (or debit cards, it seems) are not accepted.

Bill Me Later APR and Financing

Like any line of credit, Bill Me Later charges interest. The APR is 19.99% on any balance carried past the grace period. Also, if you’re carrying a balance from the previous month, balances from the current month will also be costing you interest.

Some retailers have promotional arrangements with Bill Me Later which allow you to finance an item for 90 days. These “No Payments for 90 Days” purchases are essentially short-term 0% interest loans. But like all such loans, they charge you 90 days of interest if you don’t pay it off at the end of the 90 days. From the site:

During the promotional period, interest will accrue. If you do not pay in full by the end of the promotional period, the accrued interest will be added to the remaining balance due. However, if you do pay in full by the promotion end date, you will not have to pay any interest.

This info from the site explains how different balances work and lists the fees for late payments:

Comparing Savings Plans

Type of AccountBenefitsDrawbacks
Regular savings accountsLow minimum balance
Ease of withdrawal
Low rate of return
Certificates of deposit (CDs)Guaranteed rate of return for time of CD
Possible penalty for early withdrawal
Minimum deposit
Interest-earning checking accounts
Checking privileges
Interest earned
Service charge for going below minimum balance
Cost of printing checks; other fees
Money market accountsFavorable rate of return
Allows some check writing
Higher minimum balance than regular savings accounts
No interest or service charge if below a certain balance
Money market fundsFavorable rate of return
Some check writing
Minimum balance
Not insured
U.S. Savings bondsFairly good rate of return
Low minimum deposit
Government guaranteed
Exempt from state and local income taxes
Lower rate when redeemed before five years

* Daily Periodic Rate and Annual Percentage Rate for Standard and Promotional Purchases. From time to time Lender may offer Standard Purchases or Promotional Purchases with a lower rate that may apply for a limited time.

** Grace Period for Standard and Promotional Purchases. Lender will not assess a Finance Charge on Standard or Promotional Purchases during any Billing Cycle in which payments and credits made on or before the Payment Due Date reduce the outstanding balance for Standard and Promotional Purchases (excluding Standard and Promotional Purchases made during the Billing Cycle, Promotional Purchases subject to a Deferred Payment option, and Promotional Purchases subject to a Deferred Interest option) to zero or to a credit balance. The Grace Period does not apply to a Promotional Purchase subject to a Deferred Payment option or subject to a Deferred Interest option.

more details.

Is This a Good Idea?

So is this the next best idea, the wave of the future? Maybe, but I don’t like to it. I’m prejudiced against easy credit and it worries me that this doesn’t even have limits or the same structure that a normal credit card has. Bad as can be, they have boundaries. I’m sure that Bill Me Later also has boundaries, but I worry that just like with pre-approved cards and sub-prime mortgages, the customers will take an authorization as proof that they can pay it off, rather than thinking about their particular finances.

Easy credit is dangerous.

Moreover, part of my mind can’t wrap around the idea that if you can’t get a credit card (or have no more balance left) and apparently need the credit so you can’t use your credit card or PayPal account (they’re the same company, so if you deeply distrust PayPal you should distrust Bill Me Later) or Google Checkout that you’d still be making purchases online using credit. If you don’t have the money to pay right now, then it’s time to think three or four times about buying something.

There’s almost nothing you’d be buying online that is critical enough that you have to buy it with Bill Me Later if you can’t buy it with money you actually have.

Perhaps it’s because the site gives the impression of this being a series of micro-loans and bills, which would be a headache to manage compared to a credit card with one statement. This impression may be incorrect and it may be better organized.

After thinking about it for a while, I decided that I could see it being useful in lieu of a credit card if you don’t use one regularly and only occasionally purchase things using credit. In that case, all the arguments which apply to the convenience of credit cards or 0% financing apply (as well as the accompanying risks). When looking into it in lieu of a credit card, you have to take into account the 19.99% interest if you’re planning on carrying a balance. That’s better than some cards, but nowhere near a competitive rate.

It’s not for me, but then I only use credit for one purchase a month in order to maintain a credit purchase. What about you, is this the kind of service you’d consider using? Think it’s a dumb idea? Best thing ever?

This is obviously NOT a sponsored post, but I wanted to clarify anyway for the good old FCC. I don’t have affiliate links for it nor was I compensated in any way. My husband asked me if I’d heard about it and whether I knew if it was on the up-and-up (he’d seen it among checkout options) and I decided to look into it. It’s an interesting concept but not one I think I’d ever find useful.

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Miranda January 13, 2010 at 8:39 am

I’m not that impressed with the idea of using Bill Me Later, either. I can see where it might be helpful for those who don’t like spreading their credit card numbers around the Internet, but there are plenty of non-credit options for that now as well.
.-= Miranda´s last blog ..Reader Question: Where to Start with Debt? =-.

CindyS January 13, 2010 at 12:28 pm

The temptation to use credit is everywhere. Some people associate Bill Me Later with Bill Me Never. Eventually, you have to pay for it PLUS the interest. Like you, if I have to pay for it on credit, I probably don’t really need it.
.-= CindyS´s last blog ..Health Care Reform: Yay or Nay =-.

Clare January 14, 2010 at 4:42 am

bill me later ! sounds good, but not so good if your a shopoholic. I like your concept on life, and debt management such a great site to have stumbled accross.
.-= Clare´s last undefined ..If you register your site for free at =-.

HoundsGood January 14, 2010 at 10:41 am

I agree with you. The interest and high and it is really just an excuse to rack up credit on non necessities. Credit cards are for emergencies – when you can’t get to the bank and need a tow truck – or for when you don’t want your debit card tied up. Rental car companies may hold funds on your debit, so use a credit card but only if you have the funds to back it up in cash to pay when you get home.
.-= HoundsGood´s last blog ..Going…Going…Gone. SSP Calendars Still Remain =-.

Griff January 14, 2010 at 10:38 pm

I have used Bill Me Later to buy airline tickets once. It was helpful because I was short on cash flow. It was no interest for ninety days and by the next month I paid it off. But i could see how this may be a bad thing if people cannot pay if off in time. Thanks for the breakdown of info.

Caity January 15, 2010 at 12:44 pm

Hi all – I came across your post on Bill Me Later and wanted to share some more information on the service.

If you’ve used the Bill Me Later option for online purchases, you should check out this recent article in the San Jose Business Journal – http://sanjose.bizjournals.com/sanjose/stories/2010/01/04/daily99.html

I’m with the law firm mentioned in the story, and they are representing consumers in a lawsuit against Bill Me Later and its predatory billing practices. The lawsuit claims Bill Me Later charges consumers inflated interest fees – some exceeding an APR of more than 100 percent.

Thanks for the chance to provide more clarity on the Bill Me Later service and to warn consumers of its unjust practices.

ronnie perryman July 26, 2010 at 5:10 pm

i didnt realy get an answer from youre email please reply

Katrina March 16, 2011 at 4:48 pm

I think it’s fine if you are disciplined enough to pay it off before the promotional rate. I bought a camera using it so I could have it before an important trip and I have 6 months to pay it off. I budget that in and it’s paid off and I have not used my credit card.

marco May 4, 2011 at 9:01 pm

Bill Me Later Is A Scam, They recently paid 30 Million dollars to settle class action law suit for overcharging interest and fees. its like paying with an email credit card yet they dont send you any statements just 8 spam emails a month one of which is a reminder that your statement is ready no amount no due date so you wate a few days for your statement to arrive then bam 25.00 in late payment fees plus interest . but they never send a statement.

ElCabron May 21, 2011 at 8:56 pm

“but they never send a statement.”

BillMeLater exists pretty much entirely in cyberspace. If you opened your account online, the email notifying you the statement is ready is the *only* statement you will get. It says so in the online contract you got when you signed up – it would be irresponsible of them to send you a financial statement in an unencrypted mail!

So – caveat emptor!

If you don’t manage credit well BillMeLater is *NOT* a good idea. Like any other type of “easy” credit, it’s structured in such a way that people with poor money management skills will get hosed.

I used it as a cash flow tool – zero percent interest is “free money” when the money in the savings account is accruing interest. I bought a TV for my family – but we already had the money for it in savings, we had saved up for a year to buy it!

No savings account? You shouldn’t open new credit lines! Save your pennies until you can walk in and buy the stuff.

James Bounds September 21, 2012 at 9:23 am

I never heard of Bill Me Later until I received a bill from them. I contacted them and let them know I didn’t have an account with them. The information they had for me other than my name and address were wrong. They ran an internal fraud investigation, denied my claim of fraud, and sent me an affidavit to fill out. I sent them all the information they requested, case number filed with local police and a contact number. Now they claim I have to send in the actual police report when all they have to do is call the constables office, give the case number and it will be sent to them. They-BML-have claimed many times that it was against the law for them to contact law enforcement regarding my case, which is a lie. Be very careful when dealing with this company.

Don Medinger jr March 4, 2013 at 10:03 am

Don’t use bill me later, its all a big scam. They have some of the worst customer service known to man, its almost like they want to piss you off. They locked up my account because I don’t know the year my childhood house was built in.. who would? That was over 15 years ago when I lived in that house and even then I didn’t know what year it was built… Now I have auction items I can’t pay for was planning on using bill me later which I have over a thousand dollar credit spending limit. . I asked 5 times to talk to a manager at bill me later and they put me on hold for over an hour each time until I hung up. I wish companies like this would have to pay for the discomfort and problems they cause so many. They also asked me to send in my drivers license and a bunch of social security card forms to their fax machine… very odd, I have a feeling they are trying to steal peoples identity. Then they threatened to call the cops on me because I said a curse word after all this bs. You gotta be kidding me.

Don Medinger jr March 4, 2013 at 10:05 am

thats whats wrong with the world.. to much bullshit like this going on can’t get anything done.

Bob March 30, 2013 at 5:22 pm

I don’t think Bill Me Later is a good idea, mostly because I don’t see any need for it.
Their practices are deceptive. As an example, in Dec of 2011 I purchased something on Ebay that cost about $ 40. I intended to pay for it out of my Paypal balance. Somehow I was directed to Billmelater instead of Paypal and I didn’t even realize I was opening the account.
I didn’t get any statements until Oct of 2012. At that point the interest charges had added up to about 170. I asked for, and did get, a statement showing the purchase. I paid the amount of the purchase but I am refusing to pay the interest. This is an ongoing dispute. They now say I owe them $ 252. KLetters sent to them are ignored and/or unanswered.

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