Investing

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Company: Concentrix (CNXC)

Business: Concentrix provides technology-infused customer experience (CX) solutions and runs customer service for 2,000 customers globally. They are the second largest outsourced CX company globally and provide CX process optimization, technology innovation, front- and back-office automation, analytics and business transformation services. It also offers customer lifecycle management, customer experience/user experience strategy and design, as well as analytics and actionable insights.
Stock Market Value: $4.8B ($72.59 per share)

Activist: Impactive Capital

Percentage Ownership:  5.11%
Average Cost: $106.48
Activist Commentary: Impactive Capital is an activist hedge fund founded in 2018 by Lauren Taylor Wolfe and Christian Alejandro Asmar. Impactive Capital is an active ESG (AESG) investor that launched with a $250 million investment from CalSTRS and now has almost $3 billion. In just five years, the firm has made quite a name for itself as an AESG investor. Wolfe and Asmar realized that there was an opportunity to use tools, notably on the social and environmental side, to drive returns. Impactive focuses on positive systemic change to help build more competitive, sustainable businesses for the long run. Impactive will use all the traditional operational, financial and strategic tools that activists use, but will also implement ESG change that the firm believes is material to the business and drives profitability of the company and shareholder value. Impactive looks for high quality businesses that are usually complex and mispriced, where it can underwrite a minimum of a high-teens or low-20% internal rate of return over a three- to five-year holding period. The firm also seeks active engagement with management to set up multiple ways to win.

What’s happening

Impactive Capital has reported a 5.11% interest in CNXC for investment purposes.   

Behind the scenes

Concentrix, the second-largest outsourced CX company globally, is a high-quality business. It has a 96% retention rate, average client tenure of 15 years and high switching costs, with tailwinds via shift to outsourcing. Once clients choose an outsourced provider, they are extremely loyal, largely due to the complexity of implementation, which can take up to 12 months. This sticky and profitable growth has led the company to grow operating margins nearly 600 basis points from 8.3% in 2016 to 14% in 2022.  Additionally, Concentrix has very low cyclicality, showing resilience across various economic conditions, including Covid. The company’s scale benefits have created a competitive advantage, positioning it to take share and drive more than 30% IRR. Concentrix has grown both organically and via acquisition over the past 15 years to get to its leading position in the sector. Just last month it acquired Webhelp, creating a diversified global CX leader. Combined, Concentrix and Webhelp could generate double-digit profit and free cash flow growth.

However, Concentrix trades at the lowest multiple in its history – a mid-teens free cash flow yield and less than 7 times earnings, while peers trade at 18 times earnings. This dislocation is largely driven by generative AI fears despite Concentrix being a stable business that is capital light and growing. But technological innovation is not a new factor in this industry. Since 1994, the CX industry has seen the creation of the internet, text-based chat bots, email and an initial wave of artificial intelligence-based chat bots five years ago. The net effect of this innovation has been that the major players have grown their business fifty-fold. Impactive thinks that AI will be no different, that these AI risks are overblown and that it has the potential to be transformative in how it allows companies to be productive and grow their top line. Customer service and human interaction will always be an important factor to a growing enterprise, and AI has the potential to drive demand as we have seen in both the health insurance and airline industries.
Historically, Impactive has utilized an activist toolbox focused on strategic initiatives, operational improvements, capital structure and ESG. The firm sees significant strategic and capital allocation opportunities here: Concentrix is poised to generate 80% of its current market capitalization in capital available to deploy over the next three years, generating $2.5 billion in free cash (50% of the current market cap), and it will have $1.5 billion of debt capacity to deploy into accretive acquisitions and share repurchases, which could drive substantial earnings growth. Impactive is often a value-added stockholder and can be very helpful in helping the company analyze how to use this cash, whether for share repurchases, investing in organic growth or consolidating mergers and acquisitions.
On the ESG front, there is tremendous opportunity to improve employee retention. CX industry turnover can range from 20% to 60% per year and replacing one employee can cost about 20% to 30% of a worker’s yearly wage. Impactive is currently working with the company to implement creative solutions to do so, including building breakrooms in Asia, offering free feminine hygiene products in the Caribbean, and implementing flexible schedules for working parents in the United States.
Impactive believes that there is a significant return opportunity here with a base case IRR of 24% to 45% and an upside case IRR of 78%, assuming normalized growth over the next three years and execution of synergies following the Webhelp combination.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.  More

Year-end Planning

If you inherited an individual retirement account, the IRS waived penalties for some missed mandatory withdrawals this year.
But certain heirs now have a shortened timeline due to changed “required minimum distribution,” or RMD, rules.
Even without RMDs for 2023, it still may make sense to start taking them as part of a long-term tax planning strategy, experts say.

Elenaval | Room | Getty Images

If you inherited an individual retirement account, the IRS waived penalties for some missed mandatory withdrawals this year. But there could be reasons to start taking them anyway, experts say.
Prior to the Secure Act of 2019, heirs could “stretch” IRA withdrawals over their lifetime, which minimized year-to-year tax liability. However, certain heirs now have a shortened timeline due to changed “required minimum distribution,” or RMD, rules.

Now there’s a 10-year withdrawal rule for certain heirs, which means they must empty the inherited account by the 10th year after the original account owner’s death.

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But if beneficiaries put off withdrawals or take only that minimum early on, they could wind up with a “giant RMD” at year 10, warned IRA expert and certified public accountant Ed Slott. “And they’ll get buried in taxes.”
“Even though some beneficiaries are not subject to RMDs this year, maybe they should take them anyway,” he added.
By starting RMDs sooner, heirs can smooth out taxes over a number of years and possibly reduce the overall bill with proper planning, Slott said.

Leverage ‘pretty attractive’ tax rates now

Another reason to take RMDs sooner may be to leverage the current federal income tax rates, which could be changing in a couple of years.

“The reality is we’re in a pretty attractive and low income tax rate environment,” said certified financial planner Ben Smith, founder of Cove Financial Planning in Milwaukee, who also urges heirs to start taking RMDs. “I think it’s important for folks to remember that the tax brackets can and do change.”

Former President Donald Trump’s tax overhaul temporarily reduced the individual federal income tax brackets. Before 2018, the individual rates were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
Currently, five of these brackets are lower, at 10%, 12%, 22%, 24%, 32%, 35% and 37%. Without changes from Congress, those lower brackets are slated to sunset after 2025.

To that end, “ripping the band-aid off later may be less beneficial for folks that are in a higher bracket,” Smith said.
Plus, higher inflation over the past couple of years has expanded the income thresholds for each rate, meaning it takes more income to reach each tier, Slott explained. “Everybody says inflation is bad and things cost more,” he said. “But it’s great when it comes to taxes.”Don’t miss these CNBC PRO stories: More

The Federal Reserve is expected to announce no rate hike at the end of its two-day meeting next week.
Consumers will still feel the effects of higher rates and persistent inflation.
Here’s a breakdown of how the Fed’s moves have affected your mortgage rate, credit card bill, auto loan and student debt.

Chris Wattie | Reuters

Credit card rates top 20%

Most credit cards come with a variable rate, which has a direct connection to the Fed’s benchmark rate.
After the previous rate hikes, the average credit card rate is now more than 20% — an all-time high. Further, with most people feeling strained by higher prices, balances are higher and more cardholders are carrying debt from month to month.
Even without a rate hike, APRs may continue to rise, according to according to Matt Schulz, chief credit analyst at LendingTree. “The truth is that today’s credit card rates are the highest they’ve been in decades, and they’re almost certainly going to keep creeping higher in the next few months.”

Mortgage rates are at 8%

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rate for a 30-year, fixed-rate mortgage is up to 8%, the highest in 23 years, according to Bankrate.

“Rates have risen two full percentage points in 2023 alone,” said Sam Khater, Freddie Mac’s chief economist. “Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory.”
Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rose, the prime rate did too, and these rates followed suit.
Now, the average rate for a HELOC is near 9%, the highest in over 20 years, according to Bankrate.

Auto loan rates top 7%

Federal student loans are now at 5.5%

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
For those with existing debt, interest is now accruing again, putting an end to the pandemic-era pause on the bills that had been in effect since March 2020.
So far, the transition back to payments is proving painful for many borrowers.

Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Deposit rates at some banks are up to 5%

“Borrowers are being squeezed but the flipside is that savers are benefiting,” said Greg McBride, chief financial analyst at Bankrate.com.
While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.46%, on average, according to the Federal Deposit Insurance Corp.
However, top-yielding online savings account rates are now paying over 5%, according to Bankrate, which is the most savers have been able to earn in nearly two decades.
“Moving your money to a high-yield savings account is the easiest money you are ever going to make,” McBride said.
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The United Auto Workers strikes have brought new attention to a popular idea: a four-day workweek.
While surveys show most employees want shorter weeks, employers have yet to broadly embrace these schedules.
Experts say there are still ways to get more flexibility at work.

No-mad | Istock | Getty Images

The United Auto Workers union has brought new attention to the idea of a 32-hour workweek as part of its strike demands.
Turns out, most workers would embrace a shorter workweek.

A recent Bankrate survey found 81% of full-time workers want a four-day workweek. That goes particularly for younger workers ages 18 to 42, with 83% embracing that work schedule, the personal finance website found.
The enthusiasm for a four-day workweek comes as the Covid-19 pandemic prompted many workers to question the so-called “hustle culture” that has defined traditional full-time in-office work. Many people now want a better work-life balance, prompting workers to want to continue to work from home rather than returning to the office.
“When you look at these younger generations, they might be more shaped by some of the changes that we felt from the pandemic,” said Sarah Foster, economic analyst at Bankrate.

To get a four-day workweek, 48% of Gen Z and millennial workers said they would be willing to work longer hours; 35% said they would change jobs or companies; 33% said they would work fully in person; 20% said they would take fewer vacation days; 13% said they would accept a pay cut; and 12% said they would take a step back in their careers.
Yet it remains to be seen whether the idea will be widely adopted by employers.

“It’s still nontraditional,” Foster said. “Because so many Americans want it, it’s probably going to mean competing for those relatively few jobs that offer the perk.”

Employers are emphasizing well-being

In the meantime, Gen Z and millennial workers still say their top priority is higher pay, with 32%, according to Bankrate’s research. But better work-life balance came in a close second, with 31%. That includes flexible working hours, more time off and the ability to work from home.
“Employees want their organizations to share in their sense of well-being,” said Julie Schweber, senior knowledge advisor at the Society for Human Resource Management, or SHRM.
Employers, in turn, are making efforts to show they care about workers’ well-being.
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That includes expanded mental health resources and benefits, and more options for paid or unpaid leave for family and child care, Schweber said. Employers are also expanding their wellness offerings in areas such as handling stress and financial planning, as well as enhanced insurance subsidies, on-site flu and Covid shots and health screenings.
The availability of a formal four-day workweek is still limited, Schweber said. The perks workers might find more widely available instead include unlimited vacation time, flexible hours or “Summer Fridays” where employees can either leave early or not work at all on Fridays during the summer, she said.

How to ask for flexibility

While negotiating more flexibility may be possible, experts say it’s important to be strategic.
“It may be tough to ask right out of the gate, when an employee really hasn’t demonstrated their superstar status yet,” Schweber said.
You may want to pick your timing for after you’ve established a strong reputation on the job, she said.
If you want a four-day workweek, start by talking to your boss, Monster career expert Vicki Salemi suggested. While a companywide policy may not provide that schedule, sometimes there is flexibility in individual departments, she said.

Alternatively, there may be other flexibility arrangements you can negotiate that would better suit your needs.
For example, by emphasizing what you have been contributing through longer hours, you may be able to negotiate for reimbursement of your time spent commuting or working overtime, she suggested. If instead you need flexibility with regard to child care, you may want to make that your focus.
“The benefit of negotiating directly with your boss is determining ahead of time what you need most, and that’s what you would prioritize,” Salemi said.
Often, employers will try to work with those requests rather than risk losing good employees, she said.
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Nearly 13% of U.S. households were food-insecure in 2022, a new USDA report finds.
These rates are “significantly higher” than the year before.
Families are contending with the expiration of expanded nutrition benefits during the pandemic.

People wait in line for a meal served by Queens Together, local restaurants and The First Baptist Church with help of Northwell Health and Ponce Bank in New York on May 6, 2023.
Selcuk Acar | Anadolu Agency | Getty Images

The share of U.S. households facing hunger is rising at an alarming pace.
Nearly 13% of American households were food-insecure in 2022. That means some 17 million families, or 1 in 8 U.S. households, struggled to meet their nutritional needs at some point in the year, according to a new report by the U.S. Department of Agriculture.

The prevalence was “significantly higher” in 2022 than in 2021, when 13.5 million households were food insecure, according to the USDA.
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“The results are unacceptable,” USDA Deputy Under Secretary Stacy Dean said.
Food insecurity is even more of a challenge for certain groups.
More than 22% of Black-led families reported food insecurity in 2022, and more than 33% of single mother-led households did.

The department’s findings come from an annual survey of nearly 32,000 households conducted by the U.S. Department of Commerce.
“There is no excuse for anyone going hungry in America,” said Luis Guardia, president of the Food Research & Action Center. “Congress must act now to make substantial investments in anti-hunger and anti-poverty programs.”

Consequences of expired pandemic-era aid

Pandemic-era aid programs, including the emergency expansion of the Supplemental Nutrition Assistance Program, or SNAP, rental assistance and direct stimulus payments, led to a record decline in poverty, experts say. At the same time, food insecurity rates fell, too.
“It speaks to the importance of a strong safety net,” Dean said.
However, most of these relief measures wound down or expired in 2022, with many states reducing their emergency SNAP allotments.

“The unwinding of critical Covid-19 pandemic interventions has made it more difficult for millions of families to afford to put food on the table,” Guardia said.
Those facing food insecurity are at more than double the risk of experiencing anxiety and depression, one study found. Food insecurity is also associated with a much higher likelihood of developing multiple chronic health conditions, such as diabetes and heart disease.
Last year, the American College of Physicians said food insecurity had become a threat to public health in the U.S. More

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Apple sometimes bundles multiple App Store purchases and subscriptions into a single transaction, which may not be charged to a user’s account until several days later.
Some consumers face budgeting challenges and hefty overdraft fees as they grapple with the unpredictability of when charges will hit their accounts.
“They’re not accounting for that charge hitting later, and they may spend [the money] on something else in the meantime and then end up with hefty fees,” one expert said.

Igor Golovniov | SOPA Images | LightRocket via Getty Images

For many purchases, once you swipe your debit or credit card or click “buy now,” that transaction swiftly shows up as pending on your account. But that’s not always the case if you’re shopping in Apple’s App Store. 
Apple is known to do something called “bundled billing,” where it groups purchases made within a certain period into a single charge. 

The tech giant has used the practice since the early days of the iTunes Music Store in 2003, and it often means users can purchase apps, subscriptions, books and music without having the funds charged to their account until several days later.
It may seem like a small difference in timing, but Apple’s practice of delaying and combining charges can lead some consumers to face budgeting challenges and hefty overdraft fees as they grapple with the unpredictability of when expenses will hit their accounts. 
“It doesn’t make any sense,” said developer David Barnard, growth advocate for RevenueCat, which makes a tool to automate Apple’s billing on the developer side. Barnard has also experienced the delay with some of his own App Store purchases. 
“In modern times, where you purchase something online and you get an email receipt within seconds, it’s a bizarre practice,” he said.

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Longtime Apple user Savannah Moore, 35, of Buena Vista, Colorado, told CNBC the bundling affected her less when she worked full-time and generated more income. But now that she’s on disability and only gets paid once a month, she said not knowing when she’ll be billed makes it harder to plan. 

Apple recently billed Moore a total of $15.98 for two separate transactions, a subscription and an in-app purchase, causing her to be charged three days after purchase for the subscription and two days after the in-app purchase.
With the delayed charges, she said she is often misled by her account balance and has incurred overdraft fees on multiple occasions. 
“I go out with my friends, buy a cheap drink and get a taco,” she said, recounting an experience. “I wake up the next morning and my account bounced because the taco was charged by the person I bought it from that night … but Apple didn’t charge what they were supposed to charge [days earlier], until also that night.”

A spokesperson at Merchant Advisory Group, which works with more than 150 merchants across the U.S., said it’s not unusual for businesses to develop systems that help them minimize the transaction costs imposed by card networks. Starbucks, for instance, has a rewards program that incentivizes customers who pay with a Starbucks gift card by awarding two “stars” for every $1 spent, as opposed to one star if they were to pay with a credit or debit card. 
“It’s really the same process, just a different way of making that process work.”
That said, Apple’s practice is unique among major app stores.
Asked about the practice, an Apple spokesperson told CNBC in an emailed statement that the company sometimes bundles multiple purchases and subscriptions into one bill for the convenience of its customers, and sends a single email receipt instead of an individual email for every purchase a customer makes. It also notes the practice on its website in the support section on how to confirm billing charges.
Apple did not respond to follow-up requests to clarify how it determines the duration of a delayed charge and when it decides to group purchases.
Meanwhile, Google Play does not bundle, a company spokesperson told CNBC. Its website says that customers are charged “shortly” after purchasing content and will receive a confirmation email with their order information. 
An Amazon spokesperson said purchases on Amazon Appstore are treated separately and a “separate clear” notification is sent to the customer for each charge.

Bundling charges can cut ‘swipe fees’

There are likely financial advantages for Apple in bundling and delaying charges, some experts say.
Businesses have to pay a per-transaction fee — or “swipe fee” — each time they process an electronic payment. The swipe fee is typically a percentage of the transaction amount plus a fixed fee. Credit card swipe fees average 2.24% but can be as high as 4%, according to the Merchants Payment Coalition. The Federal Reserve capped debit card fees at 21 cents plus 0.05% of the transaction. 
By delaying a charge so it can be grouped with other purchases, Apple may be able to retain a larger profit margin.
Delayed and bundled charges were more comprehensible in the early days of the iTunes Music Store because charging a customer each time they purchased a $0.99 song would have been coupled with steep interchange fees, said Barnard, the developer. But the practice made less sense with the emergence of the App Store in 2008.

When we swipe our credit card or make a purchase, we’re happy. We enjoy buying stuff, we just don’t like seeing the transaction.

Michael Barbera
Chief behavioral officer at Clicksuasion Labs

Bundling could have cost-cutting perks for the customer, said Lawrence Sprung, a certified financial planner and the founder of Mitlin Financial in Hauppauge, New York.
Since Apple can save on transaction fees by grouping purchases, he said it’s also likely that customers can pay less for those purchases.
“If the company can keep their cost down, then the hope is that they’ll keep the cost down for the consumer,” Sprung said.

An illusion of spending less money less often

When a customer isn’t billed immediately after a purchase, it can drive them to make more purchases, according to psychology experts.
Bundled billing can reduce “pain of paying,” which refers to the negative emotions people experience when paying for goods or services, said consumer psychologist Michael Barbera, chief behavioral officer at Clicksuasion Labs. If a customer receives a receipt or notification after every purchase they make, they’ll be less likely to spend money in the future.  

“When we swipe our credit card or make a purchase, we’re happy,” Barbera said. “We enjoy buying stuff, we just don’t like seeing the transaction.”
So, when customers can indulge in an app or service without being billed on the spot, they’re more likely to associate their interactions with Apple as experiential rather than transactional, said Barbera — and that positively influences consumer behavior.
The practice of bundling charges and the lack of clarity on how the policy is executed create the illusion that customers are spending less money less often, said Avigail Lev, a clinical psychologist and consultant based in San Francisco.
That can lead to overspending — especially for people who aren’t the best at tracking expenses.

At some point, we kind of have to say, ‘Hey, I’m an adult. I know I’m spending this money, I need to keep track of it.’

Taylor Kovar, CFP
CEO and founder of Kovar Wealth Management

The financial consequences of bundled billing may also disproportionately affect people who live paycheck to paycheck, said behavioral scientist Piyush Tantia, chief innovation officer at Ideas42. Those individuals tend to have volatile income and expenses that make it difficult for them to track their finances thoroughly. 
“They’re not accounting for that charge hitting later, and they may spend [the money] on something else in the meantime and then end up with hefty fees,” Tantia said. “For someone who’s already tight on finances, that extra fee is very, very painful.”

How to limit the financial effect of delayed billing

Artistgndphotography | E+ | Getty Images

As Apple user Moore discovered, bundled billing can be more problematic for shoppers using debit cards. After the Consumer Financial Protection Bureau began scrutinizing banking fees, some banks have eliminated overdrafts or implemented more consumer-friendly policies. Even so, the average overdraft fee is $26.61 and can be as high as $38, according to recent data from Bankrate. 
Certified financial planner Taylor Kovar, CEO and founder of Kovar Wealth Management in Lufkin, Texas, said Apple’s delayed billing has affected some of his clients. Although it would be ideal for customers to know when they will be charged — as they do for many recurring bills such as utilities or student loans — he said, it’s still important for them to take responsibility for their purchases.
“At some point, we kind of have to say, ‘Hey, I’m an adult. I know I’m spending this money, I need to keep track of it,'” Kovar said. 
With technological advancements, Kovar said, consumers should take advantage of free budgeting apps that allow them to set up alerts and track where their money is going. He also said it’s safer to charge Apple App Store purchases to a credit card instead of a debit card because it protects against fraud and overdraft fees.

It’s not common for people to buy something and immediately check their bank accounts to see if the charge is posted, said behavioral scientist Michael Liersch, head of advice and planning for Wells Fargo Wealth and Investment Management. People tend to keep a “mental account” of their money as it comes in and goes out, and check in on it sporadically.
Due to this, he said, the delayed charges can affect people differently based on how often they engage with their finances.
“When you think of general consumer behavior, it’s not uncommon for people to look at that information possibly once a month,” Liersch said. “It’s much less usual for someone to look at it moment to moment or daily.”
For people to maintain agency over their finances with delayed billing, Liersch said it’s critical for them to focus on how much money they have available to spend on a daily, weekly and monthly basis. More

If you’re making $120,000 per year, saving $1 million for retirement might seem out of reach. But with a little dedication and the right timing, it’s certainly possible — if you stick to a clear plan.
As a rule of thumb, most financial advisors suggest that you save 10% to 15% of your salary for retirement. But if your goal is to get to $1 million, the percentage you need to invest will vary drastically depending on how old you are when you start investing.

CNBC crunched the numbers, and we can tell you how much of your income you’ll want to tuck away if you make $120,000 per year. 
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These numbers assume that you plan to retire at age 65 and have no money in savings now.
Financial advisors typically recommend the mix of investments in your portfolio shift gradually to become more conservative as you approach retirement. For investing, we assume an average annual 6% return. We don’t take into account inflation, taxes, pay increases or other savings-affecting factors life may throw your way, so make sure you plan accordingly. 
Watch the video above to learn how much you should be saving to reach your goal. More

Retail credit cards and buy now, pay later programs are ways to spread out payments on big purchases.
However, they both operate differently: one typically involves paying set amounts over time, the other requires committing to a new line of credit.
“Either tool can work for you, it really just depends on your particular situation,” said Matt Schulz, chief credit analyst at LendingTree.

Getty Images

Both retail credit cards and buy now, pay later programs can offer opportunities to spread out payments for high-priced purchases, especially during the year-end holiday shopping season.
Buy now, pay later, or BNPL, is like a new form of old-school layaway plans, except you can take an item you buy with you rather than leaving it at the store until you pay it off. Using financing deals from retail credit cards also allows you to take an item home immediately after purchase, but they operate differently than BNPL plans and serve different purposes.

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Shoppers who plan on spending hundreds of dollars on holiday gifts this year may want to compare and contrast both payment options.
“Either tool can work for you, it really just depends on your particular situation,” said Matt Schulz, chief credit analyst at LendingTree.
Here’s how to decide which program works best for you and your financial goals, according to experts.

Buy now, pay later deals can buy you ‘a little extra time’

“If you need a little extra time to pay something off, then a ‘buy now, pay later’ loan can be a really appealing thing,” said Schulz.

That’s because BNPL allows you to take an item home or have it shipped to you immediately after you agree to make a set number of payments over a set period of time, according to Sara Rathner, a credit card expert and writer at NerdWallet.

While consumers may find these programs a bit more palatable compared to carrying credit card debt, shoppers should be mindful that interest or fees may still be rolled into those monthly payments, depending on the company and terms of the deal, added Rather.
BNPL accounts can also be difficult to manage if you have several different ones active at one time.
“If you bought a bunch of stuff and you entered into several BNPL plans around the same time, you’re going to be having these withdrawals from your account within a short time frame of each other,” said Rathner.
Depending on how tight your budget is, your financial situation can get complicated, noted Schulz.

Retail store 0% deals can help with big purchases

Retail stores’ co-branded credit cards can give shoppers valuable benefits, such as discounts and early access to sales, especially during the holidays.
But their interest rates tend to be much higher than regular credit cards: The average retail card APR hit a record 28.93%, according to recent Bankrate research. Consumers can bypass interest payments by paying their balance in full every month, said Rathner.
In addition, retail credit card accounts — especially newly opened ones — often include “deferred” or zero interest promotions. A “deferred interest” or 0% interest retail card can give you roughly six to 12 months to pay a bigger purchase off, said Schulz.
However, it will be really important to pay the balance off before the period ends. Otherwise, not only will you be saddled with interest on the remaining balance, you will also retroactively incur interest on the original purchase price, warned Rathner.

How BNPL, retail cards can affect your credit

Holiday debt can be very sticky for cardholders. Nearly a third of Americans (31%) of Americans who incurred credit card debt when shopping during last year’s holiday season had yet to pay it off in August, NerdWallet found.
Yet, people still plan on financing their holiday purchases on debt. Actually, sign-ups for retail credit cards consistently spike every year in the fourth quarter, specifically November and December, according to credit bureau company Equifax.

Retail cards are often a cardholder’s first line of credit opened because they can be easier to qualify for.
Unlike a BNPL, a new retail card will mean you’ll be able to access that credit going forward if you need it, and it can also help you to rebuild your credit score, said Schulz.
BNPL don’t help you improve your credit score because that payment history isn’t reported, said Schulz.
Additionally, credit cards can provide a stronger consumer protection; if you need to make a return or if a merchant doesn’t hold up their end of the bargain with a purchase, you have the ability to dispute the charge and get money back if ruled in your favor, said NerdWallet’s Rathner.
“So many people, for better or worse, lean on credit cards as an emergency fund in difficult times,” added Schulz. “That’s not something you can do with a BNPL.” More