Sezzle Fees: Is the Sezzle Financing Option Worthwhile?

Financing has gone through many changes over the years. Today, buyers have more options than ever to finance even small purchases. A relative newcomer to the financing world is the buy now pay later (BNPL) option.

BNPL providers allow buyers to purchase an item today and pay it off over a short period with little to no interest and fees. One such option is Sezzle. But just because Sezzle fees and interest are typically zero, does this make it a good option?

Below, we discuss what Sezzle is, how it works, the Sezzle fees you may encounter and whether it’s a sound financing option.

What is Sezzle?

Sezzle is a buy now pay later (BNPL) point-of-sale (POS) financing option available at over 47,000 retailers. It offers short-term, no-interest financing that allows qualified shoppers to make four equal payments — one upfront payment and three additional biweekly payments after the first payment.

Sezzle is mostly geared toward e-commerce, but it also has a virtual credit card you can use for in-store shopping. Like the online option, the virtual card breaks up your purchase into four payments and doesn’t charge interest.

What are the Sezzle fees?

As long as you make your interest-free installment payments on time, there are no Sezzle fees in most cases. However, Sezzle fees are not completely unheard of and do apply in some instances.

Rescheduled payment fee

If you can’t afford a payment, Sezzle will allow you to reschedule one payment due date per order. For example, if you have a payment due tomorrow, but you need a few extra days until your paycheck arrives, you can reschedule that one payment without a fee. However, if you reschedule a second or third payment, a Sezzle fee will apply.

You can reschedule your interest-free payment for up to two weeks later for a rescheduling fee of $5 or less.

Failed payment fee

If your payment to Sezzle fails due to insufficient funds, inaccurate credit card or bank account information, an expired payment method or any other reason, a Sezzle fee may apply. However, Sezzle does offer at least a 48-hour grace period before charging a failed payment fee. This grace period can be up to 15 days in some states. If you rectify the failed payment within the grace period, the Sezzle fee will be waived.

The fee amount and grace period rules are not disclosed on Sezzle’s website. Sezzle falls outside the Truth in Lending Act (TILA) rules, so it’s not required to disclose this fee.

Convenience fee

Another Sezzle fee is the convenience fee. This may apply if you choose a credit card, debit card or prepaid benefits card as your biweekly payment option. This payment processing fee will cost up to $5 per transaction.

This fee will not apply in states that prohibit it, and Sezzle will alert you of the fee before you make the payment. It also will not apply if you choose an electronic funds transfer — the ACH transfer option — directly from your bank account.

Account reactivation fee

If you miss a payment on your installment plan and it remains overdue for two days, a $10 Sezzle fee will apply. Sezzle calls this an account reactivation fee, but it’s essentially a late fee. On top of this late payment fee, you’ll also lose the ability to use your Sezzle account for new purchases until you bring your payment plan current.

How does Sezzle work?

As mentioned earlier, Sezzle's main line of business is as a POS financing option for online stores. When you reach the checkout page at a Sezzle merchant, Sezzle will appear as a payment option (if the total is at least $35). Simply choose Sezzle as your payment option and complete the application process. If you’re approved, Sezzle will show you the biweekly payment plan.

If the payment plan works for you, you’ll make the upfront payment with your debit card or credit card. The remaining balance will go to your Sezzle account.

For the next six weeks, your Sezzle payments will automatically be withdrawn from your preferred payment account until your Sezzle balance is paid in full.

As mentioned above, Sezzle doesn't charge its users any fees in most cases, but it makes its money off merchant fees. These fees run 6.1% of the transaction amount plus 30 cents. If a merchant makes less than $300 in Sezzle transactions in a month, Sezzle may charge up to a $15 fee as a minimum monthly processing fee.

Does Sezzle do a credit check?

Sezzle, unlike a credit card, will not perform a hard credit inquiry. A hard inquiry can negatively impact your FICO credit score for up to 12 months. Instead, Sezzle does a soft credit check, which doesn’t affect your credit score, to determine your existing debts and establish your initial spending limit. Over time, your spending limit can change based on your Sezzle account history.

Does Sezzle report to the credit bureaus?

In its standard setup, Sezzle does not report to the credit bureaus. However, you can sign up for Sezzle Up. As a Sezzle Up member, Sezzle will report your transactions and on-time payments to the three major credit bureaus — TransUnion, Equifax and Experian — as a credit card would. The downside is that it will also report any negative information, such as a 30-day late payment.

To qualify for Sezzle Up, you must link your bank account to your Sezzle account, successfully pay off one order on time, then verify your account by entering your Social Security number and your personal information. Once you sign up, Sezzle will begin reporting your activity in 60 days or less.

Is Sezzle a good financing option?

While Sezzle doesn’t charge interest or fees in most cases, BNPL financing options, such as Sezzle, Klarna, Afterpay and PayPal Pay in 4, are typically not good options. They facilitate impulse buying by allowing you to leverage future income to purchase something today.

If you hit a rough financial patch after purchasing with Sezzle, you still have to make biweekly payments. Yes, you can reschedule payments for a fee, but that only adds to your balance and doesn’t guarantee you’ll be in a position to make the rescheduled payment.

If you miss a payment and default on the repayment plan, you could get a negative mark on your credit report. And if you keep up with the payments, this could force you to delay other more important bills, like electricity, water or rent.

This could send you down a financial cycle of borrowing and spending that can take years to break free from.

What’s a better Sezzle alternative?

Instead of resorting to Sezzle or any other BNPL option, try simply saving the cash over six weeks and then paying for it in full. This avoids the potential of overextending your finances and gives you time to think about your purchase. At the end of those six weeks, you may decide you no longer want the item or want a different product.

Sezzle sounds great, but it can cause issues

Sezzle fees and interest charges are zero in most cases, making it seem like a great financing option to spread a purchase over six weeks. However, leveraging future income can lead to issues if a financial emergency strikes, making Sezzle and other BNPL service providers bad financial options.

Instead, save up for that large purchase and pay in full.

Have credit cards put your finances in a tight spot, leading you to consider a BNPL option for even relatively small purchases? The Tally† credit card debt repayment app can help. Our app helps you manage your credit card payments, and Tally offers a lower-interest personal line of credit, allowing you to efficiently pay off higher-interest credit cards. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 to $300.