How to make holiday returns with buy now, pay later

Shoppers who used "buy now, pay later" to help finance gifts this holiday season may soon encounter an unwelcome surprise: Returns can be more challenging than when buying from the store with cash or a credit card.Returns and disputes are a common concern among buy now, pay later users, a ccording to a September 2022 report from the Consumer Financial Protection Bureau, and dispute resolution is the top buy now, pay later-related complaint in the CFPB's Consumer Complaint Database.But making a seamless return with buy now, pay later isn't impossible if you know the process ahead of time. Whether it's a gift you bought or received, you'll want to deal with the retailer when making the return and follow up with the buy now, pay later provider, if necessary.When you use a buy now, pay later provider like Afterpay, Affirm or Klarna, you're opting to divide your total purchase into smaller, often interest-free installments while the provider pays in full on your behalf. That means when you make a return, the refund goes to the buy now, pay later provider.

It's up to the provider to apply the refund to your account, and there's usually a lag.Because buy now, pay later loans have quick turnarounds — payments are due every two weeks on standard pay-in-four loans — you can get stuck making payments on a gift that has been returned.The industry also remains largely unregulated. If a package goes missing or arrives damaged, consumers have fewer protections compared with other financing products."Returns can be a challenge with buy now, pay later because there are specific dispute provisions that apply to credit cards that may not exist in the BNPL space depending on the lender," says Laura Udis, senior program manager of small dollar, marketplace and installment lending at the CFPB.Udis points out that some providers voluntarily offer protections. PayPal and Klarna, for example, have formal protection policies, which may increase the likelihood of a refund.According to Klarna, its buyer protection policy was implemented to reassure shoppers they can safely shop with the app."If goods are not delivered or if there is something wrong with them, we have a clear process to help shoppers resolve any issue and ensure that no customer is unjustifiably liable to pay for a purchase," Kristina Elkhazin, head of Klarna North America, said in an email.However, returns are ultimately subject to the store's policy, and shoppers should prioritize getting returns approved with the store before contacting the buy now, pay later provider.

FILE - A shopper carries bags down Fifth Avenue on Friday, Nov. 25, 2022, in New York. If you bought an unsuccessful gift this holiday season with a 'buy now, pay later' plan, you or the recipient might be wondering how to return it.

Buy now, pay later returns are sometimes tricky because you're dealing with multiple parties, including the store the gift is from and the buy now, pay later provider that financed the purchase. (AP Photo/Julia Nikhinson, File) Julia Nikhinson If you need to return a holiday gift that was purchased with buy now, pay later, follow these steps.— CHECK THE BUY NOW, PAY LATER PROVIDER'S RETURN PROCESS: Most providers maintain a webpage that explains the process, which can vary by provider. Learn what to expect with a refund and timeline.— RETURN THE GIFT TO THE STORE: Providers will direct you to the retailer first , so check the store's return policy.

If possible, return online orders in person so you don't risk the item getting lost in the mail. Bring relevant documents like a receipt or email confirmation. If you don't have a receipt, you may be able to make an exchange or receive store credit, depending on the store's policy.— KEEP RECORDS: Retain copies of all transactions, including returns, exchanges or issued store credit.

If you mailed a return, get a tracking number. Keep a log of communications with the store.— FOLLOW UP WITH THE BUY NOW, PAY LATER PROVIDER: Some providers may ask you to report a return on their website or app, while others require no action on your end.— KEEP MAKING PAYMENTS: Once you've returned the gift, keep paying off your loan. Refunds can take a while, and if you miss a payment, you may be charged a late fee or other penalty.

Some providers, like Afterpay, may allow you to defer a payment once you've made a return.— POTENTIALLY FILE A DISPUTE: If your purchase has not been refunded in a timely manner — from a few days to a few weeks, depending on the buy now, pay later provider — contact the provider's customer service department for more information. If the store isn't accepting your return, consider filing a dispute with the provider. This may mean logging in to your account and filling out an online form.

There's no such thing as a universal best credit card. The right card for you depends on your lifestyle, your goals and your credit history. For instance, if you're looking for travel rewards but your friend is building credit, the best card for each of you will differ greatly.And while there may not be one best card for you — the average American has about three cards, according to a 2021 Experian study — there are many times a card can be wrong for a specific situation.Here are eight times you could be using the wrong credit card, and what you can do instead.

AP Photo/Keith Srakocic, File You may have started out by building your credit with a secured card, student card or alternative card, but once your credit is in better shape, it may be time to upgrade.If you've used a starter card responsibly by keeping your utilization rate low and paying balances in full every month, you may qualify for a card that's a better fit now. A different card could offer a higher credit limit, better rewards earnings and perks like cellphone protection and travel benefits. Some card issuers may automatically upgrade your card once you've reached certain thresholds, while others may not.

Contact the issuer to check your options. AP Photo/Mark Lennihan, File New cardholders can often earn a lucrative welcome bonus but usually with a caveat: You have to spend a minimum amount within a specific time frame to get it. Note the spending requirements for a card's sign-up bonus, and use the new credit card enough by the deadline.

If you continue to pay with an older credit card that's already in your wallet, you risk missing out on the bonus if you don't spend enough on your new card.A little planning can help. Think about upcoming big purchases you need to make, such as a car repair or a new laptop. Just one of those could be enough to hit the bonus's spending requirements.

AP Photo/Jenny Kane, File It's true a store credit card can save you money, especially if you are a frequent, heavy spender at that store. However, the rewards earned with a store credit card are often only redeemable at that store, limiting their usefulness.Most shoppers would be better off using a general rewards credit card and earning more flexible rewards. Some cards have elevated rates for online shopping purchases, while others earn as much as 5% back at popular merchants like Target, Walmart and Amazon.

AP Photo/Paul Sakuma Several cards boast a top 5% cash-back rate in popular spending categories like grocery stores, restaurants and gas. The catch, though, is that you'll have to do some work to earn that rate. In most cases, you'll need to track categories: Qualifying 5% purchases may rotate quarterly, or you may have to choose your own categories.

If you're spending outside of those categories with this card, you'll likely earn a paltry 1% instead of the juicy 5% you think you're earning.Most times, you'll have to activate the bonus categories before the issuer's deadline to earn the 5%, even if you're spending in the right category. Plus, you'll likely run into spending caps in those 5% bonus categories; once you hit those caps, the rewards rate drops to 1%. For those who find a 5% card to be high maintenance, opt for one that earns a flat 2% cash back on every purchase instead.

AP Photo/Elise Amendola, File According to a 2020 NerdWallet study, 14% of Americans view credit cards as 'complicated,' and it's not hard to see why. Some issuers offer suites of cards in the same family and have names that are nearly identical. The logos of some issuers are strikingly similar, too.

Perform a quick audit of your credit cards to make sure that they are the cards you intended to get. Cards that look and sound nearly the same may be worlds apart in terms of fees and rewards structure. AP Photo/Jenny Kane, File Balance transfer cards can be excellent tools for paying off debt.

They consolidate several debts into one place, making them easier to keep up with, and they can give you a breather on interest for many months. However, if you're using a balance transfer card for everyday expenses as well, it will be hard to whittle that balance to $0. Plus, many balance transfer cards don't come with rewards.

Leave the balance transfer card at home but take the cash-back card with you — and be sure to make regular payments toward both. AP Photo/David Goldman, File It pays to know the rewards rates for all of your credit cards. Say you have two credit cards, one that earns 4% on gas and another that earns only 1%.

Using the 4% card whenever you fill up would return $30 more if you spent $1,000 annually on gas. That $30 may not seem like a lot, but small amounts add up, especially if you have multiple rewards credit cards. To help keep track of different rewards rates, you could label your cards with sticky notes or keep a small reference guide in your wallet.Often you'll have to keep spending caps in mind, too.

Issuers typically cap earnings on their highest rewards rates after you reach a certain amount of spending in a particular category. Make sure you track your progress toward that cap and switch to another card with a better rate when you reach it — until the limit resets. AP Photo/Richard Drew, File Though they may look and feel virtually the same, a debit card is very different from a credit card.

Credit cards offer protections and perks that debit cards (and cash) do not. You can earn cash back and other rewards with credit cards that you won't get with debit, and it's often easier to recover from losing a credit card than a wallet full of cash. More importantly, responsible credit card use builds your credit score, which can translate into more favorable loan terms and insurance rates, among other money-saving benefits.

AP Photo/Matt Rourke This article was provided to The Associated Press by the personal finance website NerdWallet. Jackie Veling is a writer at NerdWallet. Email: EMAIL.

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