Table of contents

What is Buy Now, Pay Later?

Buy Now, Pay Later (BNPL) is a payment option offered by retailers to allow customers to spread the cost or delay the payment of their purchase.

It has become a very popular payment method for online purchases, but there has been plenty of controversy in the media surrounding these payment schemes.

Klarna, Clearpay, PayPal – Pay in 3, and Laybuy are just a selection of BNPL providers. While they allow you to split the payment, you could face late fees if you miss an instalment.

Are people relying on BNPL?

The Financial Conduct Authority (FCA) announced that just over one in four adults in the UK (27%) used BNPL at least once in the six months before January 2023.

This trend has continued this year as Citizens Advice found that more than one in four UK adults (28% – the equivalent of 15.1 million people) said they were likely to use Buy Now Pay Later to help with festive spending. This rises to over one in two (56%) parents with primary school-aged children.

It’s next month’s problem…

A lot of people don’t realise that BNPL is a form of credit and it’s important to think about whether you can afford any repayments.

And, should circumstances change, will you be in a position to cover your monthly repayments?

Speaking to the BBC, 24-year-old Tamzin McGrath, said using BNPL would be the only way she’d be able to get through the festive period.

“I’ve already got money I need to pay back after using it during the Black Friday sales,” Tamzin told the BBC.

“So I think I will need to use them again for Christmas to get presents.

“If you’ve not got the money right now you think it’s okay because Klarna and Clearpay can pay for it for you and that becomes next month’s problem.”

What are the dangers?

As the popularity of Buy Now, Pay Later continues to rise, consumers must understand that this seemingly convenient option is a form of credit.

While BNPL can prevent you from potentially turning to loan sharks and high-interest loans, the stats reveal a concerning trend, with a significant percentage of adults, including parents, relying on BNPL for festive spending this year.

It’s important to recognise that deferring payments and thinking of it as ‘next month’s problem’ can lead to a cycle of debt, especially if your circumstances change.  

Spreading the cost may be appealing short-term, but only if you have the means to make the repayments when they’re due.

Falling into the BNPL trap without a realistic repayment plan may result in financial strain and potential long-term consequences.

Our BudgetSmart tool can help you maximise your income, reduce your spending and find savings in every corner of your finances.

Get in touch

If you’re worried about your finances and need free debt advice, we can help. Contact us on 0800 316 1833 to get started or visit payplan.com