The popularity of buy now, pay later schemes

Buy-now-pay-later (BNPL) is becoming increasingly popular, especially among younger shoppers both online and in some selected High Street stores in the UK. We’ll be exploring ways to use BNPL responsibly, ensuring that you remain financially resilient while doing so.

Buy-now-pay-later (BNPL) is becoming increasingly popular, especially among younger shoppers both online and in some selected High Street stores in the UK. Although catalogue retailers such as Littlewoods are less popular today, the recent demand for BNPL has invited new players to join the market.

Companies such as Klarna, Clearpay, and Afterpay are just a handful of fintech’s that are providing BNPL options. We’ll be exploring ways to use BNPL responsibly, ensuring that you remain financially resilient while doing so.

  • Why has BNPL become so popular recently?

    There are several factors that are contributing to the surge in popularity for BNPL. The main factors are the adoption of the payment option by many online retailers and a selection of high street retailers, such as ASOS, Homebase, Amazon, and Boots. It has even been labelled as the “the future of millennial finance”, gaining a strong foothold among shoppers with tight budgets, who are looking for flexible ways to spread or defer payments.

  • Is it really “Interest free”?

    Many BNPL providers offer an “Interest free” service. However, it is important to note that although you may not be paying any interest on the purchase, you are still entering into a credit agreement and that means that you are borrowing money. The costs associated with BNPL come in the form of late fees. Therefore, it is very important to consider whether this option is right for you, as missing a payment set by the provider can result in significant fees being added to your bill.

  • Only spend what you know you can afford

    Most BNPL insist on making weekly repayments for a set period, therefore it’s important to avoid impulse BNPL purchases if they exceed your budget. Only making purchases within your set budget is important when considering the BNPL option. Although it might be tempting to make a purchase now and pay for it later, the costs soon build up on missed repayments. Using our budget planner can help you to set money aside, accordingly, click here to start planning today.

  • Wants. vs. Needs

    A straightforward and practical way to consider a spending decision is to decide whether the product that you have seen is a want or a need. One of the concerns surrounding BNPL and its popularity is that it can influence consumers to spend more money on impulse purchases, therefore it’s always wise to question yourself. Using this rule of questioning a decision can be helpful, as it can ultimately save you a lot of money.

  • Consider setting reminders for payments

    Noting down your payment dates for BNPL can help you to avoid missing payments and incurring late fees. If you have a set date for repayments, consider creating a reminder on your phone that will prompt you to make your repayment. If you had some spare funds, you may also consider making an early repayment, if your BNPL provider has this option available. Direct Debits might be available with some providers, however, keep in mind that this is not an option for all providers.  

Prepare for the future

Although you may not be able to save a lot of money between now and Christmas this year, being ahead of the Christmas rush can help to stretch your existing budget. It’s also a great time to start saving up for next year. Ask yourself how much you can save each month and see how a small amount per month can build up over time with our savings calculator here.

  • The information provided in this article is for guidance and educational purposes only. Police Credit Union Ltd. does not offer regulated financial advice. Please seek independent financial advice.

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