Buy now, pay later: how to use it without getting into debt

"BNPL can be a really helpful way to spread the cost of bigger purchases, but it only works if it's treated like a short-term loan rather than free money. We often see people thinking it's harmless, but missing even one payment can lead to fees and unnecessary stress."

"The biggest issue with BNPL is that it isn't regulated in the same way as other consumer credit products. That's set to change on 15 July this year, when the Financial Conduct Authority will start regulating BNPL, which means users will get greater protection and more rights."

"BNPL lenders will have to carry out an affordability check before each loan is taken out, even if it's only for a small amount. They will need to provide clear, upfront information and offer support to customers in financial difficulty."

Buy now, pay later (BNPL) allows consumers to split purchases into three or four installments over weeks or months without interest if payments are made on schedule. Major UK providers include Klarna, Clearpay, and PayPal. Over 11 million UK users access BNPL at online and physical retailers. However, regulators and consumer bodies warn that missed payments trigger fees, debt accumulation, and credit score damage. BNPL currently lacks regulation equivalent to other consumer credit products. Starting July 15, the Financial Conduct Authority will regulate BNPL, requiring affordability checks before loans, clear upfront information, financial difficulty support, and Financial Ombudsman complaint access.

Read at www.theguardian.com