Buy now pay later dangers: what to know before using BNPL

BNPL services integrate into the checkout process of thousands of online and physical retailers. Klarna is the largest in the UK, followed by Clearpay and Laybuy. Typically, you split a purchase into 3–4 equal instalments due over 6–8 weeks, or 'Pay in 30 days' which gives you a month. In most cases, no interest is charged if you pay on time — making it superficially similar to a 0% credit card. The business model relies on merchants paying a fee, and on consumers missing payments or upgrading to longer-term (interest-bearing) finance.

The risks of BNPL are several and interconnected. First: it makes it psychologically easier to spend money you don't have. Research shows BNPL users spend significantly more per transaction and buy more items they would otherwise skip. Second: missing a payment triggers late fees, and in some cases your debt is passed to a debt collection agency. Third: increasingly, BNPL providers do hard credit checks that affect your credit score. Fourth: BNPL doesn't come with Section 75 protection like credit cards — if a retailer goes bust, you may still owe the full amount.

BNPL regulation in the UK has been developing. The FCA has been consulting on bringing BNPL firms under full regulation, which would require proper affordability checks and mandatory clear disclosure of risks. Until full regulation is in place, consumers have less protection with BNPL than with regulated credit products. Always treat BNPL like a loan — because that's what it is.

If you need to spread costs, a 0% purchase credit card is usually safer and better regulated — with Section 75 protection and clearer rules. If you use BNPL, treat it with the same discipline as any debt: only use it for things you genuinely can't afford upfront and would buy anyway, set up automatic payments, use only one provider at a time, and track your commitments carefully.