Zip Review: How It Works, Fees and Is It Worth It?

Zip is a financial technology company that offers a buy now, pay later (BNPL) app. The app allows people to split purchases into smaller payments without interest or a hard credit inquiry. Depending on the plan, payments can be made in two, four or eight installments. Some users consider services like Zip as an alternative to a personal loan for smaller purchases.

Find out more about Zip and whether it could work for you.

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Quick Take

• Zip comes with an option to pay every two, four or eight weeks.

• There is no hard inquiry on your credit to use the service.

• Zip charges an origination fee for every transaction.

• Zip allows you to change one repayment date per calendar month.

• If you miss a payment, your account will be paused.

What Is Zip?

Zip offers BNPL payment options through its mobile app. Founded in Australia in 2013, the company says its goal is to provide “fair, flexible and transparent” ways for consumers to split purchases into smaller payments. Today, Zip can be used at many online and in-store retailers.

How Zip Works

Here’s a closer look at how the Zip app works and how purchases are repaid over time:

Payment Structure

Zip has three different payment options:

• Pay in two: You can split your payments into two different options over 14 days.

• Pay in four: You can split your payments into four different installments.

• Pay in eight: For purchases over $200, you can split into eight different payments.

Purchase Limits

Purchase limits can vary, but payment amounts can start from $35 and range up to $2,000. Spending limits can increase based on your individual history.

Funding Speed

Approval is usually instantaneous. You’ll know immediately whether your transaction will be funded.

Credit Check

Zip does a soft inquiry to verify identity and financial information. This doesn’t impact your credit score.

Zip Costs and Fees

• Origination fee: This is charged on each transaction. The fee will be based on the payment plan and amount. It can range from $0.50 to $124.

• Late fee: A late fee may apply if you miss a payment. The exact amount can vary depending on the purchase and payment plan.

• Payment rescheduling fee: The first payment reschedule is usually free, but additional rescheduling may incur a small fee.

• Annual percentage rate (APR): This percentage isn’t disclosed until you pay.

Pros and Cons of Zip

Before using Zip, consider the key benefits and possible downsides.

How To Sign Up and Use Zip

To start using Zip for purchases, you’ll first need to create an account. Follow these steps.

1. Download the Zip app on your phone.

2. To be eligible for Zip, you need to be 18 years or older and a U.S. citizen. Enter your name, date of birth and phone number and mailing address.

3. Link a payment method, like a credit or debit card.

4. Find out your approval amount.

Making Online Purchases With Zip 

1. Look for the retailer on your Zip app.

2. Click on “Pay with Zip.”

3. Zip will show you a payment schedule.

4. Once you agree, Zip will generate a virtual card.

5. Enter the number for your purchase — just like a credit card.

Making In-Store Purchases With Zip

1. Tap “In-store” on your Zip app.

2. Select the payment amount.

3. The app will generate a virtual card.

4. You can tap your phone to pay.

Zip vs. Other BNPL Apps

Zip isn’t the only BNPL option. Here’s how it compares with other popular services.

Afterpay

Afterpay is usually fee-free at partner stores, while Zip will charge an origination fee. However, Zip allows you to shop anywhere Visa is accepted, while Afterpay has to rely on a merchant network.

Affirm

Affirm offers larger limits — up to $20,000 — while Zip’s spending limit is typically between $100 to $2,000. Affirm has no hidden fees, but interest rates can go up to 36%. Affirm is better for large purchases, while Zip is good for everyday goods.

Who Zip Is Best For

Are you the ideal person for Zip? See if you fit into one of these categories:

• You don’t want a hard inquiry on your credit.

• You’re comfortable with the BNPL concept.

• You like the idea of splitting payments into four installments.

• You have a regular income and can make your payments.

• You are a small-scale spender and don’t typically exceed $500 for your purchases.

Final Take

Zip is accepted at most places that accept Visa. You can split purchases into two, four or eight installments. While there’s no interest, you’ll pay an origination fee with each transaction, and the APR is determined at the time of purchase. If you miss a payment, your Zip account may be paused.

Zip FAQs

Still wondering how Zip works? These FAQs cover the most common questions about fees, payments and eligibility.

Is Zip legitimate?

Zip is a legitimate financial technology company that partners with WebBank which is FDIC-insured.  

Does Zip check your credit?

Zip does a soft inquiry on your credit. This inquiry won’t impact your credit score.  

How much can you spend with Zip?

You can spend up to $2,000 with Zip.

What happens if you miss a payment?

If a payment doesn’t go through, your account is locked. You won’t be able to make any new purchases.

Does Zip charge interest?

Zip doesn’t charge interest with the “Pay in 4” plan. You pay in four installments every two weeks. Zip does charge an origination fee.

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