According to national Citizens Advice, almost one in 10 people in Great Britain are planning on using Buy Now Pay Later (BNPL) for part of their Christmas shopping.
With millions of people in the UK using BNPL to split or delay payments it’s important to understand that while this can be a useful payment method for some, the customer journey often lacks the necessary care, information and affordability checks to stop people falling into debt.
As a credit product, it’s essential that people understand what they’re signing up for, and what will happen if they’re unable to make repayments. These companies include Clearpay, Klarna and Laybuy.
Here’s some top tips you need to know before you plan on using BNPL this Christmas:
1. Understand what you’re signing up for
Check how and when you’ll need to pay, and if you could be charged late fees or interest.
It’s also worth noting your credit score could be affected if the BNPL firm reports late payments, or if you’re referred to a debt collector for missed payments, and you then don’t pay the debt collector.
2. Have a plan for how you’ll repay
While it can be tempting to split payments, make sure you have a plan for how to pay the money back – particularly if your circumstances or income were to change. Be careful if you’re using BNPL repeatedly or using multiple BNPL options. You should be keeping track and know how much you owe in total.
3. If you’re struggling to pay, get help
If you’re worried contact Citizens Advice in West Sussex as soon as possible.
You should also ask the BNPL firm if it can help, such as lowering your monthly payment or waiving a late fee. But this could mean you’re charged interest, so always make sure you understand what you’re agreeing to.
4. If you need to cancel or return items, contact both the retailer and the BNPL firm
This is because your consumer rights are with the retailer, but you have a separate agreement with the BNPL firm to pay for what you buy.
Generally the retailer will refund the BNPL firm, which will refund you, or adjust the amount you owe if you only returned part of an order.
5. If something goes wrong you can complain to the BNPL firm and the retailer
Again, your consumer rights are with the retailer, but your payment agreement is with the BNPL firm. BNPL firms have different rules on resolving disputes and so check what happens to your payment plan during this time.
When doing your Christmas shopping this season, please consider these tips before using BNPL. If you’re struggling to pay or would like more information regarding BNPL, we can provide advice and support, contact us.