Should I shop using ‘buy now, pay later?’
*PLEASE BE AWARE THIS IS AN OLDER POST AND THERE MAY BE A MORE UP TO DATE POST, OR UPDATED INFORMATION AVAILABLE ON https://www.citizensadvice.org.uk/ *
Buy now, pay later (BNPL) options are becoming more and more prevalent when shopping online. While these services can offer shoppers a convenient way to pay for orders, reports show that many consumers don’t realise they’re a serious credit.
In this post, we’ll answer some common questions we receive about BNPL services so that you can decide whether they’re the right option for you.
Got a question? Speak to our dedicated advice team by calling free on 0808 2787 801.
What is ‘buy now, pay later?’
BNPL is a credit option that allows you to spread the cost of your online purchases. Some of the brands you may recognise offering BNPL services are Klarna, Clearpay, Afterpay, and PayPal Credit.
These options are usually given at the checkout when shopping online, and allow shoppers to either pay over a number of months or delay paying for a specific term, e.g. 30 days. Many types of BNPL credit are unregulated, which can mean additional risk for consumers.
Although many consumers don’t realise this, using a BNPL service is a serious credit, just like using a credit card. If you can’t make the repayments, you’ll be charged interest and you could get into serious financial difficulty.
What are the issues?
One of the main issues with BNPL services is that shoppers don’t understand what they’re signing up for. These services may seem like a good option for people who aren’t easily able to use credit cards, for example young people and those with a low income. However, those people are more likely to struggle with repayments, therefore getting into debt and financial trouble.
Not all BNPL services conduct affordability checks, and the spending limits can be inconsistent. This means that shoppers can easily set up credit with a range of different BNPL providers, spending more than they can afford and increasing their overall debt. A report from Citizens Advice shows that in the last year, 1.4 million people have regretted using BNPL because they spent more than they could afford.
Making payments
Whether you’re spreading the cost of a purchase or delaying it, it’s important to keep on top of BNPL payments. Many shoppers don’t realise that they’ll have to pay fees if their payments are late or missed. This information isn’t always clear when signing up, so it can come as a surprise when these fees are charged. If you’ve taken out multiple BNPL services, these fees can add up to a significant amount.
If you’re unable to make your payments, it’s common that your debt will be passed to a collection agency. This means that your credit score may be impacted and you may be subject to bailiff action. Many shoppers using BNPL don’t realise that using these services can have such serious financial implications.
If there’s a problem
As with any debt issue, it’s a good idea to get help as soon as you can. If you can’t make your payments, or your financial situation has changed, get in touch with the BNPL provider and see what support they can offer.
If you can’t contact them or your situation gets worse, you can speak to one of our advisers by calling free on 0808 2787 801.
If you need advice about a consumer issue, get in touch with our team today - call us free on 0808 2787 801.
