Buy now, pain later?

Monday 12th Jun, 2023

Be careful with buy now pay later schemes this Christmas

Increasing numbers of Unify members are being declined loans because their disposable income is tied up in Buy Now Pay Later Schemes (BNPL).

BNPL is a financial product that allows people to split or delay payments. It can be a useful option to some people but is now being heavily promoted by online retailers and delivery companies, misleading increasing numbers of people into taking on this type of debt without understanding the consequences.

BNPL lets shoppers stagger payments for items such as clothes, furniture or even takeaways with no interest or charges – unless they fail to pay back on time, at which point some firms impose late fees. Typically, the cost is split into weekly, fortnightly or monthly instalments and lenders typically make their money via commission from retailers. However, if shoppers cannot pay back their fee when they are supposed to the firms can ramp the prices up on their payment causing a lot of people to go into a large debt for the foreseeable future.

Lots of different websites and apps offer BNPL now which can make it very hard to keep track of how many different payments you’ve committed to and what your total spend will be.

Almost a third of shoppers who use buy now, pay later credit say repayments on the loans have become “unmanageable”, with the cost of living crisis pushing them into a debt spiral.

Barclays Bank and the debt charity Step Change said this was concerning because 30% of Britons have used BNPL to buy goods, and of these, almost a third (31%) say the lending had got them into problem debt.

A better alternative would be to save and borrow with Unify.

We make it easy to save on a regular basis so you can afford those extra expenses when they arise. And if you do need credit, we offer low interest loans and always consider your full financial circumstances so we never suggest debt you can’t afford.

Don’t let BNPL take care of Christmas and leave you with huge bills in January and February that may trap you with extra fees. Speak to us about the alternative.

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