BEWARE OF ‘BUY NOW, PAY LATER’ OFFERS

Citizens Advice Devon and Cornwall answers some of the questions their offices are being asked about...

Q: I have been looking online to buy a new TV, and see the option to ‘buy now pay later’. I am attracted to this option as it will help me to spread the costs, but don’t really know much about such schemes. What do I need to look out for?

A: While it might be tempting to delay payment – and the adverts can often be very enticing and sometimes misleading - it often can be a slippery slope to being tangled in debt.

‘Buy now pay later’ agreements are also known as store finance. They’re a way for you to purchase goods on credit and pay for them usually after a set interest-free period, or in instalments. While you can use this payment method at some high-street shops, it’s more commonly used by catalogues and online retailers. Some agreements will let you pay after a set period of time (hence the name), while others will let you pay for your purchases in instalments (sometimes called ‘slices’).

Overall, 27% of UK adults have used these firms in the last 12 months, rising to 37% of disabled people and 45% of people with a mental health problem. Four in 10 of those who’ve used Buy Now Pay Later in the last 12 months are struggling to repay. A quarter of consumers regretted paying using these platforms, with the most common reasons being spending more than they can afford, and paying more than they expected.

This type of finance has existed for years, but recently, some companies have popularised it with younger consumers. These adverts will often not highlight the risks of paying in this way. Risks can include damage to your credit rating if you are late or miss a payment; and charging high interest and fees if you can’t afford to pay what you owe on time.

The adverts sometimes target people on social media who might be less able to afford the items and encourage them to buy now and pay later. It’s not just the buy now pay later providers that do this, some online retailers, especially clothing retailers, do too. Buy now pay later is very easy to use, with efficient technology and with low minimum spends of just £10. So it’s no surprise that lots of people are tempted to use it to pay for shopping.

But it’s easy to not realise the massive negative impact it could have on your debt and credit rating if you don’t keep your repayments on track.

For more information and advice go to www. moneyadviceservice.org.uk