Buy Now, Pay Later Puts a New Twist on Consumer Debt

Buy now, pay later is coming soon to a store near you—if it’s not there already. Mobile apps from companies including Afterpay Ltd. and Klarna Bank AB that let consumers purchase goods on installment plans exploded worldwide last year. Retailers from Macy’s Inc. to Forever 21 Inc. have also been adding the option at checkout in brick-and-mortar stores.

Unlike the layaway installment plans of old, the new ones are effectively short-term loans that allow consumers to take their purchases home immediately. They’re popular among the credit-card-wary, especially younger consumers. In the U.S., the number of people who’ve tried ...