The popularity of Buy Now, Pay Later (BNPL) services, such as Afterpay and Klarna, have exploded over the past few years. In fact, they now account for more than $100 million in transactions annually. When shopping online, you will now almost always see an option to choose one of these services along with more traditional payment options.

In general, these services allow you to split the total amount of the sale into four equal payments, with no interest, provided you make all payments as scheduled. These services are certainly convenient, but they are not without financial risk. Let’s look at the hidden dangers of Buy Now, Pay Later services.

They Are a Form of Credit

BNPL providers may promote themselves as a simpler way to pay for everyday purchases without relying on debt or credit, but don’t be fooled: BNPL payments are a type of credit. And if you miss a payment, some services charge late fees or interest. Be cautious when using these services, as you can easily get in over your head.

Temptation to Spend More Than You Planned

There’s a reason retailers aggressively promote BNPL: People tend to spend more using these services. A LendingTree survey found two-thirds of shoppers spent more using BNPL plans than they would have otherwise. Before completing that latest purchase, check your budget and bank account. Be sure you can really afford what you’re buying instead of putting yourself at risk of falling into debt.

Your Credit Could Take a Hit

Most BNPL providers don’t report on-time payment data to the major credit bureaus, meaning you receive none of the upsides of responsible repayment. However, negative events like missed payments or collections activity, are likely to be reported. This makes it even more critical to make your BNPL payments on time and avoid missing any.

No Consumer Protections

Because of BNPL’s standard four-installment payment plans, these services fall outside the purview of the Truth in Lending Act. Translation: Consumers have no protection from any potential predatory or deceptive lending practices with BNPL providers. Federal law requires five installments before triggering any regulations.