And what are the alternatives if we don’t want to use Buy-Now-Pay-Later?

Covid and the cost-of-living crisis have fuelled the use of Buy-Now-Pay-Later.

It feels like it’s everywhere these days and many of us will have used it. 

But for those who don’t know much about it, this is a Quids in! explainer on Buy-Now-Pay-Later – and what the alternatives are when we’re struggling to make ends meet.

Top 5 things to know

1. Buy-Now-Pay-Later (BNPL) is a kind of short-term credit and there are lots of suppliers out there that offer it, mainly online. Klarna, Clearpay and Laybuy are some of the bigger names. They tend to work by letting us pay in instalments or in one payment at a later date. There’s no interest but there are usually late fees and we normally get a year or less to repay.
2. Our credit score can be affected if we miss a BNPL repayment. If our credit score goes down, it could make it harder to borrow in future. We could also be referred to a debt collection agency.
3. BNPL is growing REALLY quickly! There are new providers popping up all the time and they’re all different, so we need to read the small print to make sure we know what’s expected. Some banks, including NatWest and HSBC, now offer it too.
4. Retailers want us to use BNPL as it gets us spending. Some of them offer the choice of SIX schemes when we check out. It’s up to the shopper to do the research and find out which, if any, is the best.
5. BNPL is not regulated yet. One of the ways this affects shoppers is that we don’t get much protection with BNPL. If we spend £100 or more on a credit card, we’re protected if the product doesn’t arrive or is faulty. But if we use BNPL we don’t have this security.

So what’s the alternative?

With one in three of us who use BNPL missing a payment and getting a charge, we may not be sure if it is for us. But if we sometimes find ourselves unable to make ends meet there are some other options.

Some providers have moved into the food sector – even offering BNPL on things like takeaway pizza.

For the weekly food shop, supermarket Iceland has teamed up with ethical lender Fair For You.

Their Food Club Card lets shoppers spread the cost of their food up to a value of £75. They then pay it back at a rate of £10 a week. It’s still a loan though, and there’s interest on the debt. But if we use it, we won’t be allowed to owe more than £100 at a time.

Fair For You can also help with the cost of household essentials. Their loans are cheaper than those of other providers, but we’ll still be expected to pay it all back with interest.

Flexible payday

If we’re in work or looking for a job, some employers are now allowing us to get part of our pay packet early.

Asda, for example, recently said its staff can get half of their contracted pay before payday if they want to.

It’s done through an app called Wagestream, which can also be connected to our bank account. This lets us see how much we’ve earned and spent at any point during the month.

And don’t forget the Quids in! Budget Planner. It’s a great way of keeping track of our income and spending each month.

Image: Mikhail Nilov / Pexels