When the retail sector first got hit with the Trump administration's tariffs, it was Walmart and Costco that seemed to be a safe bet, both by their own accounts and those of analysts. However, this week, Walmart's CFO took a sharp turn and admitted that tariffs will likely begin to affect the consumer by the end of this month and into June—leaving Costco as the frontrunner for affordability in America. And now, the warehouse store has announced a major change that could put it even further ahead of Walmart and fellow competitor Amazon.
RELATED: Costco Shoppers Are Abandoning These 10 Products: "It Was Like a Sweaty Sock."
Costco just introduced a partnership with Affirm.
Costco just announced that it's partnering with Affirm to offer online shoppers a buy-now-pay-later option (BNPL). Unlike most credit card transactions, Affirm does not charge late fees, nor does it have hidden fees. And applying for a BNPL plan through Affirm does not affect your credit score, even if you're denied.
"Approved Costco members can choose from Affirm’s personalized monthly payment plans for purchases ranging from $500 to $17,500," states a press release. "These plans feature transparent pricing and credit offers—including APR discounts."
On Costco's website, they say that payment plans are available "in 3-36 monthly payments," and APR rates range from 10 to 36 percent. This option is not available for in-store purchases.
The payment option could be a major help to families looking to purchase big-ticket items from Costco, such as appliances, electronics, or furniture.
"As summer approaches, we're seeing more consumers turn to Affirm to prepare for the season ahead—whether it's outdoor entertaining essentials, like a new barbecue or patio furniture, a storage shed, or a new set of appliances," said Pat Suh, Affirm’s SVP of Revenue, in a statement. "Costco members in particular know the value of planning ahead and buying in bulk. We're excited to offer them an alternative to traditional credit, helping them confidently manage their spending on larger purchases without hidden fees."
Approved Walmart customers have been able to use Affirm online since 2019. In 2023, the retailer introduced the BNPL option at self-checkouts via the Walmart+ app. Likewise, Target partnered with Affirm in 2021, providing the payment plan to eligible shoppers spending $100 or more. Amazon has also given shoppers the choice to pay for orders over $50 with Affirm since 2021.
RELATED: Walmart Is Updating 650 Stores This Year With New Layouts and Products—Here's Where.
Some experts urge caution with BNPL plans.
It's important to note that not everyone will automatically receive a BNPL plan from Affirm. On their website, Affirm states that you may be denied a payment plan due to "your credit score and credit utilization, payment history with Affirm, the age of your Affirm account, current outstanding loans, income and debt obligations, or recent bankruptcies."
Even if you are approved, there's no guarantee that your plan will be interest-free, either (APR terms are explained at the time of application).
Affirm also has different payment plans, some of which require a down payment. And while Affirm notably doesn't charge late fees, partial or late payments "can hurt your credit score," they state.
Financial experts urge caution with BNPL plans that can easily lead to overspending or debt stacking.
In an interview with NPR, Jennifer Streaks, senior personal finance reporter at Business Insider, explained, "People don't see these loans as real money. "If I was going to pay $100 today, but then I only have to pay $10, then I've got $90 today to do something else. It almost feels like you got some money back."
The other major issue is that BNPL companies don't report to credit bureaus, so when people go to apply for traditional loans or new credit cards, their full debt isn't being taken into consideration, which can lead to an overextended line of credit, or what industry insiders call "debt stacking," Ed deHaan, a professor at Stanford University's Graduate School of Business, told NPR.
RELATED: Shoppers Are Ditching Sam's Club for BJ's—Here's Why.
Walmart offers shoppers another payment option.
Though Costco's partnership with Affirm puts it on more equal footing with its competitors, Walmart still may be winning this race. For one, their BNPL plans are also available in-store.
Additionally, through their app, shoppers can use Walmart Pay, the retailer's in-house version of Apple Pay. Since June 2024, Walmart Pay has had a pay-by-bank partnership with the Automated Clearing House (ACH) that allows shoppers to link their bank accounts with the app.
In Sept. 2024, Walmart improved this feature via a partnership with global fintech company Fiserv. Previously, pay-by-bank transactions took up to three days to clear, but Fiserv added real-time payments for online customers, as Best Lifepreviously reported.
"When the transaction processes as a real-time payment, customers get immediate access to see that payment come through, I see it hit my account and I can properly budget," explained Walmart’s vice president of emerging payments, Jamie Henry, in an interview with Bloomberg. "It’s not as if I’ve got this phantom payment out there that’s going to take place a couple of days down the road."
Target has a similar option through its Target Circle Debit Card, which connects to customers' checking accounts and offers 5 percent off on all Target purchases in-store and online.
