Renfrewshire Council

"Buy Now Pay Later is currently an unregulated sector and lacks vital safeguards for customers," said Yvonne who works for the Renfrewshire Affordable Credit Alliance.

"BNPL is a form of credit where you can repay for an item interest-free using three separate monthly payments or pay back in full (all at once) in three months' time. Companies such as Klarna, Clearpay, Laybuy and Zilch are BNPL providers. Since the pandemic—and now with the cost-of-living crisis—there has been a surge in the use of this type of credit and many more people using BNPL each year.

"Most people are using BNPL for fashion, electronics, home and wellness items. It is largely used for online purchases from companies like Amazon, Argos, Curry's, Next and Very. Worryingly, 1 in 5 people who use BNPL (out of a survey of 2,500+ UK adults) used it to be essentials. That's groceries, toiletries and hygiene products, household bills and fuel.

"But when using BNPL, you aren't covered the same way you are when using credit cards. With BNPL, you cannot make a complaint to your leader or ask for a refund if an item you've purchased is damaged or broken (known as section 75 for credit cards). Even if you use a credit card to make your BNPL payment, you are still not covered. This is because the payment made to the retailer is made by the BNPL provider and not your bank. You should be aware of this because BNPL does offer you options to pay using any credit card you have stored with them, meaning you lose the section 75 protection you would get if you paid directly (without BNPL) on your credit card.

"Before you buy anything, check what buyer protection your BNPL provider offers. For example, some providers will pause payments until the issue is resolved and refund any payments you've already made if the dispute is settled in your favour. However, be aware these are policies rather than legal rights."

When using BNPL, Yvonne advised there are a few things you can do to help make sure you don't pay more than you need to.

"There are fees for late payments of between £5 and £6. People can be continually charged if they continue to be late in making a payment, but there is a maximum amount you can be charged, varying between £10 and £24 per purchase depending on the provider.

"Look out for notifications from your provider telling you when your next payment is due and have a think if you could still make the payment if an unexpected bill came in," said Yvonne. "Set up a direct debit or use your debit cards to make a repayment because if you use your credit card, you will still owe money to a card provider."

For anyone using BNPL and struggling to keep up with payments, what advice does Yvonne have?

"I would encourage people to seek help earlier rather than later," said Yvonne. "Contact the provider if you are able to and explain the issue, and try to stop spending money using BNPL. If that is not available to you, there are financial supports across Renfrewshire, such as the Citizens Advice Bureau and the Council's Advice Works team. The Money Helper website has helpful information on BNPL and all aspects of everyday finance and is part of the Money and Pensions Service.

"And avoid using BNPL if you already have some debt."

Ultimately, Yvonne explained that minimising or changing the way you use BNPL might be the option for some people, such as holding off buying an item until pay day or putting aside some savings to buy in full (all at once) later.

"Affordable credit is an alternative to borrowing money from mainstream providers and offers a lifeline to people who may struggle to borrow from banks. At the Renfrewshire Affordable Credit Alliance, we believe that everyone—no matter his or her income level—should be able to access credit. There are ethical and honest not-for-profit organisations who can support people to get credit, even if they have poor credit scores or are on low incomes.

"Credit Unions are progressive community-based financial organisations that people join. Credit unions encourage members to save regularly and borrow money under affordable repayments that suit their income. Fair For You is another option for affordable credit. This is an online 'high street shop' offering customers fair, flexible affordable credit for their everyday household needs."

See Renfrewshire Affordable Credit Alliance's website for more help and advice on money.

To make an appointment and get free, confidential advice, visit:

• Renfrewshire Citizens Advice Bureau
• our Advice Works page.

Thanks to Yvonne for talking about BNPL with us. We hope it has been useful.