Buy now, pay later solutions are common in online retail today. If you can’t cover a purchase at checkout, third-party firms let you split the cost into smaller, often interest-free installments.
But a newcomer called Accrue Savings is pitching a more traditional twist: Save first, purchase later.
Rather than buying the product immediately, you deposit funds into an account weekly or monthly. Participating merchants contribute rewards as an incentive to help you reach your savings target.
That said, the fintech startup is still early-stage and available at only around 30 smaller retailers. Accrue Savings is not a bank, so in some cases you might be better off setting up automated transfers to a high-yield savings account on your own.
Is Accrue Savings worth the attention, and what other choices exist to fund your next large purchase?
Here’s what to know.
What Is Accrue Savings?
New York-based Accrue Savings debuted in late 2021 with a straightforward pitch: give people incentives to sock away money for big-ticket purchases.
As the company states on its site: “Saving up and buying later means cash rewards, no debt, credit or fees.”
Accrue Savings was listed among Time Magazine’s 200 best inventions of 2022 for “encouraging people to save now with a new kind of layaway for the digital–banking era.”
How Does Accrue Savings Work?
Accrue Savings provides an FDIC-insured account that can be used to purchase items from a limited set of partner brands.
To be clear: Accrue Savings isn’t a bank. It’s a fintech service with banking functions handled by Blue Ridge Bank.
Here are the basic steps to buy something with Accrue Savings:
- Open an account, pick the product you want and set up a savings plan.
- Make regular, scheduled contributions into your account.
- Receive rewards from the merchant you’re saving for.
- Accumulate the total, redeem your rewards and complete the purchase.
You can tailor your Accrue Savings plan from five to 15 payments, and put in as little as a few dollars per week or up to $100 per day toward your target.
You also have the option to skip a payment or pause your plan.
Accrue Savings doesn’t pay interest on your deposits like a typical savings account. Instead, the company and its partners supply rewards once you hit your savings target.
Rewards differ by merchant and can be as much as 20% of the item’s price. So for an $800 mattress, you could potentially get up to $160 credited toward the purchase.
That said, when we checked most partners were offering about 10% rewards, with several contributing only 1% to 2%.
Benefits of Accrue Savings
The concept of gradually building funds for large buys rather than piling up high-interest credit card balances is appealing.
Accrue Savings may be a solid option for those with bad or no credit. Because you’re saving to purchase the item rather than borrowing via a credit card or short-term loan, you won’t face late payments or defaults that could hurt your credit score.
There’s no charge to use Accrue Savings. You can withdraw your funds at any time without a penalty. No fees or hidden costs is always a plus.
You can also invite friends and family to contribute to your goal. Using crowdfunding from loved ones can help you reach your target faster.
Drawbacks of Accrue Savings
Accrue Savings has a major limitation: it’s partnered with only a small set of merchants. Many are luxury jewelry, fashion and eyewear brands.
There’s a strong chance the specific item you want isn’t included in Accrue Savings’ offerings.
Accrue told Savinly that it plans to add more brands each month, including “large and small merchants in the travel, furniture and auto industry.”
For now, however, selection remains narrow.
The most familiar participating merchants include:
- Smile Direct Club
- American Signature Furniture
- Equinox Fitness Group
- Casper Mattresses
Another downside: rewards can only be used for purchases at the brand you’re saving toward — they aren’t redeemable for cash. If you opt not to complete the purchase, you’ll receive your deposits back but forfeit any earned rewards.
Lastly, detailed information about Accrue Savings can be hard to find. The website is fairly simple and it can take time to uncover the fine print about how the service operates.
Alternatives to Accrue Savings
Accrue Savings markets itself as a “first of its kind” way to save for costly items — but the idea isn’t entirely novel.
If you’re planning a major purchase, there are several other approaches to consider.
Save Independently With a High-Yield Savings Account
Accrue Savings is one method to accumulate funds over time, but nothing prevents you from saving on your own.
You won’t get merchant rewards, but you can earn interest by using a high-yield savings account.
High yields are great news for savers. Many online banks are offering competitive APYs, with some accounts above 4%.
You won’t see huge gains unless you start with a substantial balance, but every bit of interest helps.
For example, if you open a high-yield account with $100 and add $100 each month for 12 months, at a 4% APY you’d earn roughly $26 in interest over the year (assuming monthly compounding).
Buy Now, Pay Later
Buy now, pay later platforms remain a growing option to fund purchases.
Providers such as Affirm, Afterpay and Klarna let you split costs — from sneakers to electronics — into several installment payments.
You don’t usually need excellent credit to use BNPL services, and many plans are interest-free. Some consumers prefer them to high-interest credit cards.
But BNPL isn’t free money. It’s a short-term loan model that has drawn scrutiny from regulators and consumer advocates.
It’s easy to overextend if you take out multiple BNPL plans simultaneously. The low upfront cost can also tempt you into buying things beyond your means.
Used carefully — for example, having only one BNPL obligation at a time — these services can be helpful tools for spreading out payment. Proceed with care.
Layaway
Layaway is the original way to pay for a big purchase over time.
You put down a deposit to hold the item at a store (some sellers may charge a service fee), make periodic payments, and pick up the item once it’s fully paid.
Unlike buy now, pay later, layaway requires waiting for the item until you finish paying. It’s similar to Accrue Savings, except you don’t earn rewards.
Layaway isn’t as widespread as it once was. Walmart, for instance, offered layaway for many years before discontinuing it in 2021.
Some retailers only provide layaway during the holiday season.
Amazon is one of the largest retailers to offer a layaway option, though it’s limited to select items sold directly by Amazon.
Laura Bennett is a Certified Educator in Personal Finance and a senior writer for Savinly. She covers retirement, investing, taxes and life insurance.
