People think buy-now-pay-later is helping them improve their credit. They’re wrong.

Consumers are making one crucial miscalculation when they use buy-now-pay-later services: They believe it will help them build their credit, but in fact it won’t, according to a New York Federal Reserve analysis of the reasons shoppers turn to such payment options.

“Consumers think they’re building credit history with buy-now-pay-later, and that’s highly problematic, and the opposite of reality,” said Jennifer Chien, a senior policy counsel on the financial fairness team at Consumer Reports.

Buy-now-pay-later…