By Mr Bankruptcy
21st September 2021
Buy Now Pay Later (BNPL) schemes have come under scrutiny recently due to the huge increase in demand for these services but are there lessons to be learnt about a borrowing option that seems too good not to take?
What is BNPL?
BNPL offers a convenient way to pay for low-cost items. At the checkout stage of many online retailers, BNPL is offered as a choice of payment method, which can be very enticing when there’s no interest charge for the duration of the short repayment term. Subsequently, it has seen a surge in popularity, with Which? reporting a third of UK adults having used a BNPL scheme and for millennials, this rises to 67% having using this payment method at least once. In fact, the industry more than trebled in 2020.
The popularity of BNPL schemes and the lack of current regulation around them has led charities to raise concerns about their impact, with one in 10 shoppers reporting being pursued by debt collectors. Last year alone, shoppers were charged £39 million in late fees.
Four lessons from BNPL debts:
The BBC, reporting on findings from Citizen’s Advice, suggests that almost two in five people who have used BNPL in the last year didn’t think it was “proper borrowing”, and six million didn’t fully understand what they were signing up for. These findings highlight the universal lessons that apply to any kind of borrowing and subsequent debt:
Before using any credit arrangement, consider these general lessons to help you decide whether a BNPL scheme is for you or whether it could lead to problems down the line.
James Rosa Associates
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