Buy-now-pay-later has become a fast-growing industry worth £2.7bn, quadrupling in use between 2018 and 2020. It allows customers to pay the full amount for their things at a later date or pay in interest free installments over a period of time. An estimated 14 million people used the likes of Klarna, ClearPay, LayBuy and Afterpay in the UK last year, according to Citizens Advice. But for those who did not select Buy Now Pay Later at the checkout, you may be wondering why these company names still sometimes show on your bank statements or online banking apps. One reason is that some retailers use BNPL to manage their checkouts, so it shows up as the payment method even when you pay up front. You can check with the retailer to make sure it was a normal card purchase if you are worried. Another reason could be fraud, and you may have been a victim of identity theft. In this case you should contact your banks, the BNPL company, and Action Fraud, the UK’s national fraud and cyber crime reporting centre. They also recommend applying for protective registration through CIFAS, a national non-profit fraud prevention community. According to Citizens Advice, of the estimated 14 million users in the UK last year, 39% used buy now pay later without realising, so you might have accidentally opted for it without realising. It may have been pre-selected as the default payment option. Make sure to pay attention when you are about to checkout.
A state pension is the money you can claim from the government once you reach state pension age, usually paid every four weeks. You can claim it if you have worked and paid national insurance during your working life, or received national insurance credits while unemployed. Unfortunately, the state pension is not enough to survive on after retirement alone. Currently, the new state pension is £179.60 per week, or £9,339.20 a year. This figure is likely to increase with the triple-lock on pensions, meaning state pensions rise every year in line with inflation, increasing average wages, or 2.5% -- whichever is highest. Due to the government’s concern that not enough people were saving for later life, employers are now required by law to automatically enrol employees into an occupational pension scheme, where both the employer and employee contributes to the pension. Even then, the average UK pension pot only stands at £50,000. To put this into perspective, the average monthly pay in London is £28,776 a year. With a £50,000 pension pot and living at the same standard, you would not have enough to live on for two years. One sensible way to supplement your retirement income is to open a lifetime ISA- a savings account that can be used to save up for pensions with an interest boost from your provider. But you should do this earlier — starting one late in life is unlikely to give you much time to save.
The Financial Conduct Authority is calling for tighter regulation of the fast growing buy-now-pay-later industry. BNPL allows consumers to get a product they want before they pay. The cost is then paid off in installments over time. The main players are Klarna, ClearPay, LayBuy and Afterpay. The oldest, Klarna, pioneered the online payment method and was founded in Sweden by Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson in 2005. The UK BNPL market is worth £2.7bn and quadrupled in size in 2020. Younger consumers in particular have turned to this seemingly more affordable alternative to higher interest credit cards, according to FT Partners. An estimated 14 million people used BNPL in the UK last year. 39% did so without realising and 42% didn’t fully understand what they were signing up for, according to Citizens Advice. The risks associated with BNPL include fees and interest on late payments, which could push people into debt. 41% of users have struggled with payments over the last 12 months. Labour’s Stella Creasy has said BNPL is a “financial scandal waiting to happen”, comparing the new industry to payday loans. Buy now pay later companies argue they are offering people a more responsible and affordable alternative to high cost loans and credit cards.