 firms let shoppers buy items on credit and pay for it at a later date. Payments are usually spread out over several months, but some firms also ask shoppers to pay the full balance by the next month. But experts have warned using BNPL to buy presents and other festive treats could land people in serious debt later on. And it could leave you with less protection as they are not yet fully regulated in the same way as credit cards. Andrew Hagger, personal finance expert at MoneyComms said: "While it may solve a short-term cash flow problem this Christmas, it could lead to debt issues down the line if the BNPL repayments become unaffordable." People could end up borrowing too much and be unable to keep up with repayments, he said. They could also end up turning to more expensive forms of borrowing like a credit card to cover the costs. While BNPL is usually interest-free for a certain period, you'll be charged monthly interest on a credit card. The average rate is 29.8% but the exact amount depends on the card you have and the rate you can get. Those with worse credit scores are often charged higher rates. Sara Williams, founder of Debt Camel said: "Interest-free BNPL can sound so attractive with Christmas coming up fast, as it looks like it's not a real form of debt - but it is. "And the short repayment periods often don't give shoppers much time to pay what they owe back - especially if you have been paid in early December when it's hard getting through January anyway without any extra BNPL payments. "So you end up paying the BNPL on a credit card and the BNPL has become a slippery slope into too much debt. It's better to set a budget for){kind=link}
SHOPPERS have been warned not to use buy now, pay later this Christmas over debt concerns.
With Christmas around the corner and people’s pockets stretched in the cost of living crisis, many might be tempted to turn to borrowing money.
Buy now, pay later (BNPL) firms let shoppers buy items on credit and pay for it at a later date.
Payments are usually spread out over several months, but some firms also ask shoppers to pay the full balance by the next month.
But experts have warned using BNPL to buy presents and other festive treats could land people in serious debt later on.