"Buy now, pay later" plans can wrack up steep interest charges. Here's what shoppers should know.

Although U.S. consumers have embraced "buy now, pay later" loans in part because of marketing claims that they offer zero-percent financing, shoppers should be on their guard. Some BNPL products charge exorbitant interest rates, along with heavy fees when you miss a payment, according to Consumer Reports.

The loans allow consumers to split payments into smaller installments and spread them out over time, helping them make purchases they might not otherwise be able to afford. But the nonprofit advocacy organization urges consumers to read the fine print, while the group is also calling on federal regulators to adopt stronger policy measures to mitigate consumer risks posed by evolving industry practices.

The most common BNPL loans are "pay in four" products, according to the Consumer Financial Protection Bureau. These short-term credit plans divide the total amount of a purchase, usually ranging from $50 to $1,000, into four equal payments. Consumers pay the first 25% at the point of sale and the remaining three installments over the next six weeks — with no interest or fees.