If you’ve done any online shopping recently, especially if you’ve bought items on fashion sites, you’re likely to have seen some new payment options crop up.

Lots of these are from Buy Now Pay Later services. It’s important to know what they are and the potential risks before using them.

Buy Now Pay Later (BNPL) services have become incredibly popular since the start of the pandemic. So popular, in fact, that nearly 1 in 10 people are planning to use Buy Now Pay Later options to pay for their Christmas shopping. 🤶

There’s also been a big increase in the number of social media ads for BNPL. But what are these services?


What is Buy Now Pay Later?

Buy Now Pay Later does pretty much what it says on the tin. It allows you to get a product or service now without having to pay for it straight away.

This means you can enjoy what you’ve bought without seeing the money come out of your bank account immediately. 💳 You then pay the amount back to the BNPL company through instalments. And you usually don’t have to pay anything upfront. The number of instalments you pay varies depending on what company you use.

You might be thinking – why wouldn’t I want to have something now and not have to pay for it until later?!

And there definitely are some benefits to using BNPL. As long as you make your payments on time, you’re usually not charged any interest or fees. Meaning you don’t pay extra for the privilege of paying later! 💪


Risks of Buy Now Pay Later

But there are some important risks to consider before getting involved with BNPL.

One is that using these services often leads people to overspend. As mentioned earlier, people can get especially tempted by BNPL around the holiday season. But when using BNPL, they often end up spending more than they planned to. It’s harder to comprehend how much you’re paying when you don’t have to pay for it straight away. 💰

(Making a budget for your Christmas presents in advance, including writing down how much you plan on spending on each person and sticking to it, can help to prevent overspending.)


Spending in sales

Another time we see people using BNPL is when there’s a big sale, such as for Black Friday or Cyber Monday.

To make the most of the sales, people often use BNPL and end up spending more than they have. This can lead to trouble when it does come time to pay.

Ultimately, BNPL is just another name for debt as you’ll have to pay the full price eventually. So it’s best to only use BNPL when you could also afford to buy the item upfront.


Missing payments 🚨

Also, although BNPL providers don’t usually charge fees or interest if you pay on time, it can be a very different story if you miss a payment or make a late payment. 🤦

These fees and interest charges can be large and can end up costing you a lot on top of what the item cost in the first place. That’s why you need to make sure you’ll be able to afford the thing you’re buying if you commit to using a BNPL provider.


Here’s your BNPL guide

We’ve got a free, downloadable guide to Buy Now Pay Later. It includes lots more information, including:

  • How BNPL providers make money

  • Some more risks of using these services

  • What to think about before using BNPL services.


Download the BNPL guide


If you decide to use BNPL services, make sure you understand what you’re agreeing to and can afford what you’re paying for. Because getting into financial difficulty with BNPL can lead to negative effects in all areas of your life.

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