A buy now pay later agreement means you can shop for things and delay paying for them.
There are generally 3 ways of paying:
Pay later: there’s usually an interest-free period of between 14 and 30 days. But if you don’t pay on time, it can get very expensive as you might be charged late payment fees.
Pay in instalments: the amount you owe can be repaid over several months in smaller chunks sometimes called ‘slices’. Again, if you miss payments you could be hit with late payment fees.
Pay on finance: this works the same way as a loan and a hard credit check will be done.
BNPL can appear to be a cheap way to borrow, but it might also encourage you to spend money when you might not otherwise have done.
So, before signing up, ask yourself these 4 questions:
- Would I have bought this item in the first place if buy now pay later wasn't an option?
- Do I have and will I have enough money to make the future payments?
- Is there a better or more cost-effective way to borrow?
- How many BNPL agreements do I already have?
When considering BNPL, check budgeting apps to work out if you can afford the payments or use our online budget planner. If you have the HSBC UK Mobile Banking app, you can use our Balance After Bills feature, which helps you budget successfully from one payday to the next.
Read the BNPL terms and conditions carefully to make sure you clearly understand any late payment fees you could be liable for.
It’s also a good idea to research different ways of borrowing money, such as 0% credit cards or overdrafts.