Nearly one in 10 ‘plan to buy now pay later this Christmas’

Nearly one in 10 (9%) people are planning to use buy now pay later options to spread the cost of their Christmas shopping, according to Citizens Advice.

Amid the sharp rise in living costs, more than two-fifths (43%) of those surveyed are resorting to borrowing to help cover Christmas this year.

Kate Hobson, consumer expert at Citizens Advice, said: “Money can often be tight in the run-up to Christmas, but it’s still really important not to spend more than you can afford.

“If you’re considering using buy now pay later, make sure you understand what you’re signing up for, how you’ll make the repayments and what will happen if you can’t pay on time.

“As always, if you’re struggling with any kind of bill, get free, independent advice as soon as possible. Our advisers can help you understand your options and come up with a plan.”

More than 2,000 people were surveyed across Britain.

Here are Citizens Advice’s six “need to knows” for buy now pay later (BNPL) users:

1. Understand what you are signing up for. Check how and when you will need to pay, and if you could be charged late fees or interest.

It is also worth noting your credit score could be affected if the BNPL firm reports late payments, or if you are referred to a debt collector for missed payments, and you then do not pay the debt collector.

2. Have a plan for how you will repay, particularly if your circumstances or income were to change. And if you are using BNPL repeatedly or using multiple BNPL options, make sure you know how much you owe in total.

3. If you are struggling to pay, get help immediately. You should also ask the BNPL firm if it can help, such as lowering your monthly payment or waiving a late fee. But this could mean you are charged interest, so always make sure you understand what you are agreeing to.

4. If you need to cancel or return items, contact both the retailer and the BNPL firm. This is because your consumer rights are with the retailer, but you have a separate agreement with the BNPL firm to pay for what you buy. Generally the retailer will refund the BNPL firm, which will refund you, or adjust the amount you owe if you only returned part of an order.

5. If something goes wrong you can complain to the BNPL firm and the retailer. Again, your consumer rights are with the retailer, but your payment agreement is with the BNPL firm. BNPL firms have different rules on resolving disputes and so check what happens to your payment plan during this time. You could also try the chargeback scheme that is offered by card providers to help get refunds and you will need to continue paying the BNPL firm to ensure you are not in breach of contract.

6. If you pay with a credit card beware of extra fees and less protection. Credit card purchases over £100 generally have Section 75 protection, which means the credit card provider may have to help if something goes wrong.

But this protection does not apply to BNPL purchases as you did not pay the retailer directly. You may be able to use another scheme called chargeback instead.

It is also worth noting that some credit card firms may charge interest or a fee for paying your BNPL bill with your credit card – so check before opting for this payment method.