Buy Now, Pay Later has become part of everyday shopping. Whether you’re buying clothes, technology, furniture or even booking travel, it’s now one of the first payment options we’re offered at the checkout. The problem?
Many of us don’t think of it as borrowing. Paying £30 today somehow feels very different to paying three instalments of £30 over the next few months, even though we’re ultimately spending the same amount of money.
From 15th July, millions of consumers will benefit from important new protections as Buy Now, Pay Later (BNPL) providers become regulated by the Financial Conduct Authority (FCA). It’s a significant step forward for consumer rights, bringing BNPL much closer to the standards we already expect from other forms of credit.
That’s undoubtedly good news but it shouldn’t give us a false sense of security. Buy Now, Pay Later is still debt and whilst the new rules make borrowing fairer and more transparent, they don’t make it risk-free. Read on to find out more.
Photo Credit Unsplash Blake Wisz
What Are the New Buy Now, Pay Later Rules?
The biggest change is that providers of previously unregulated Buy Now, Pay Later products will now be regulated by the FCA.
That means consumers can expect:
- Greater protections when borrowing.
- Affordability checks before lending.
- Clearer information before signing up.
- Better support for customers experiencing financial difficulties.
- Access to the Financial Ombudsman Service for eligible complaints.
In simple terms, lenders will have more responsibility for ensuring borrowing is affordable and consumers will have stronger rights if things go wrong.
It’s worth remembering that existing Buy Now, Pay Later agreements taken out before 15th July won’t generally be covered by the new rules so don’t assume your current arrangements automatically fall under the new protections.
Why The Changes Matter
One of my biggest concerns with Buy Now, Pay Later has always been that consumers don’t necessarily feel like they’re borrowing money.
It’s cleverly marketed as a payment option rather than credit.
After all, there isn’t usually a lengthy application process and splitting payments into smaller chunks can make purchases feel far more affordable than they really are.
Before you know it, you might have:
- £45 coming out next week for a pair of trainers.
- £60 leaving your account for some new garden furniture.
- £75 due for that impulse fashion purchase.
- Another payment you’ve completely forgotten about arriving in ten days’ time.
Individually they may seem manageable, added together, they can quickly become a problem.
The convenience of Buy Now, Pay Later can sometimes encourage purchases we simply wouldn’t have made otherwise.
So before clicking ‘Pay in ‘ask yourself one very simple question: Would I still buy this if Buy Now, Pay Later wasn’t available?
If the answer is no, it may be worth walking away.
Affordability Checks Are Good News – But They’re Not Foolproof
One of the biggest improvements is the introduction of affordability checks.
Lenders will now have greater responsibility for considering whether repayments are realistic and manageable before allowing consumers to borrow.
However, affordability checks aren’t a substitute for your own budgeting.
No lender knows your finances as well as you do.
Only you know whether:
- You’ve got school uniform to buy next month.
- Your car insurance renewal is due.
- Christmas is approaching.
- You’re planning a holiday or major household expense.
Just because you’re approved doesn’t necessarily mean something is affordable.
Buy Now, Pay Later Isn’t Free Money
This is perhaps the most important message of all.
Buy Now, Pay Later isn’t:
- A discount.
- Free money.
- An extension of your monthly salary.
It’s borrowing. Whilst many BNPL products don’t charge interest when repayments are made on time, you’re still committing future income to today’s spending. That isn’t necessarily a bad thing if you’ve budgeted carefully. Used sensibly, Buy Now, Pay Later can be a useful financial tool.
Problems usually arise when consumers have multiple agreements running simultaneously and lose track of what they’ve committed themselves to paying.
My Top Tips Before Using Buy Now, Pay Later
Before clicking that button at the checkout, I would ask yourself the following questions.
Can I Afford It?
Not next month. Not when payday arrives.
Can I comfortably afford every repayment alongside my other financial commitments?
If the answer isn’t an immediate yes, think carefully before proceeding.
How Much Am I Already Paying?
One of the simplest budgeting tricks is to total all of your Buy Now, Pay Later repayments each month.
Many consumers are surprised by just how much they’ve committed themselves to when it’s all added together.
Have I Set Payment Reminders?
Missed payments can quickly become stressful.
Set calendar reminders or ensure you’ve set up any repayments correctly so nothing catches you by surprise.
Have I Read The Small Print?
Always check:
- When repayments will leave your account.
- What happens if you miss a payment.
- Whether any fees could apply.
- What support is available if you’re struggling financially.
Am I Buying Something I Wouldn’t Otherwise Purchase?
Buy Now, Pay Later can sometimes remove the psychological pause we naturally have before spending larger sums of money.
If spreading the payments is the only reason you’re buying something, it may be worth reconsidering whether you need it at all.
In a nutshell
The new FCA protections are undoubtedly a welcome development and long overdue. Buy Now, Pay Later is no longer operating in the Wild West and consumers will rightly benefit from stronger safeguards and clearer rights.
But regulation can’t replace good financial habits.
The golden rule remains exactly the same as it always has been:Treat Buy Now, Pay Later exactly as you would any other loan.
If you wouldn’t feel comfortable paying the repayments from next month’s income, don’t commit yourself today.
The new rules make borrowing fairer and more transparent. They don’t make debt disappear.
And sometimes, the best consumer decision you can make is simply waiting a little longer before clicking ‘Buy Now’.
About Lady Janey
Jane Hawkes is an award-winning Consumer Champion and Consumer Expert with more than 30 years’ experience on both sides of the customer service counter. She regularly appears across national television, radio and the press offering practical consumer advice on travel, money and customer rights.
