Christmas Now, Worry Later? The Hidden Costs of Buy Now Pay Later (BNPL) schemes
Buy Now Pay Later (BNPL) schemes can seem like the perfect solution to stretch your festive budget. However, it can mean lasting financial commitments well into the new year. Here are some tips to use these services responsibly:
Check if you can afford the repayments
The payments may look manageable split into instalments but don’t be tempted to spend more than you can afford. Keep a record of how much you’ve spent and when your payments are due. You can stay organized and aware of your financial commitments and keep control of your budget.
Be careful of unexpected fees
You will be charged fees for late repayments; these can build up quickly and potentially affect your credit score. Check the terms and conditions before singing up and be aware of charges and late fees.
Gift-giving without the financial stress
It can be tempting to spend a lot to get someone the perfect gift. Have honest conversations with your friends and family about what you can afford. Focus on meaningful experiences and thoughtful gifts that are within your budget.
Know what you’re signing up to
Many BNPL companies use vibrant, upbeat branding to appeal to young people. Don’t let this distract you from the long-term financial consequences of using these services.
Lack of consumer protections
You’re not protected under section 75 and BNPL services don’t offer the same protections as traditional credit cards, making it harder to dispute charges or seek refunds. However, if the complaint is with the retailer rather than the BNPL provider, you do have protection and can make a complaint.
Impact on financial habits
Using BNPL can make it easier to make impulsive purchases. Don’t feel pressure to spend money, especially during expensive times of the year such as the festive season. Sticking to a budget creates healthier financial habits.
Support available to you
If you’re worried about keeping up with payments, there is help available. If you would like to talk to someone confidentially and anonymously, contact Meic for information, advice and advocacy. Talk to us from 8am to midnight every day. To see more information about BNPL services, check out the resources on MoneyHelperUK and Citizen’s Advice.
