Bill Me Later is a service of PayPal that allows shoppers to purchase items on eBay and other websites now, but pay for the item later. It's essentially a credit line that requires only your birth date and Social Security number to use, while adding a cash-back bonus for some of your purchases. However, it's not without controversy.
You must have a PayPal account in order to use Bill Me Later, as of 2013. When you check out online and choose to pay with PayPal, you'll be given the option to pay with Bill Me Later. The option may also include a cash-back offer in the form of a percentage off your purchase or immediate money back in your PayPal account. Choose the Bill Me Later option and you'll be taken to a short application form that requires your Social Security number and birth date. Acceptance typically takes only a few seconds.
How the Service Works
Bill Me Later works similarly to a credit card with rewards. You don't have to pay up front for anything you purchase with Bill Me Later. Instead, depending on what you're eligible for when you sign up and where you're making your purchase, you'll be given six, 12 or 18 months to pay back your balance in full with no interest. However, if you don't make the minimum payments on time, you'll be stuck with a 19.99 percent APR as of 2013 and a late fee of up to $35.
Comenity Bank extends the credit line for Bill Me Later. Comenity reviews your credit report and decides if you're accepted for the Bill Me Later service. If you are accepted, you'll get a credit line that is $250 at minimum or equal to the amount of your purchase. Every time you attempt to make another purchase with Bill Me Later that is more than your credit line, Bill Me Later treats this as a request for a higher credit limit.
Controversies With the Service
The Consumer Financial Protection Bureau began an investigation of Bill Me Later in late 2013. Comenity bank makes the loans through Bill Me Later and eBay later purchases them. The federal agency is investigating whether eBay is using the service to evade state laws regarding interest rate caps and tack on rates that can go as high as 100 percent or even greater. There is also concern that some consumers can end up confused and paying more interest than if they had used a regular credit card. On the Consumer Affairs website, customers have posted 169 complaints and reviews about Bill Me Later, ranking the service 1 out of 5 stars.
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