Festivity, Finance, and the Fine Print

Festivity, Finance, and the Fine Print: Thinking Twice About 'Buy Now, Pay Later'

It’s that exciting time of year! As the days get shorter, our thoughts turn to festive shopping, gifts for loved ones, and maybe a new outfit or two for the holiday parties. It’s no surprise that while browsing online, you’re constantly seeing those easy-click options: Buy Now, Pay Later (BNPL) from names like Klarna, Clearpay, and PayPal Credit.

Spreading the cost of your purchases can feel handy and manageable, especially with those appealing interest-free periods. But here at Gateway Credit Union, we want to make sure you have a clear picture of the costs and risks involved before you click that button. After all, when it comes to your money, quick convenience can sometimes lead to unexpected complications.

4 Things to Check Before Using BNPL

While BNPL is quick and easy, it's essential to remember the fine print. Here are the crucial points we urge you to consider:

1. The Cost of Missing a Payment

Don't be fooled by the 'interest-free' label. Missing a single payment to a BNPL provider can cost you. Late fees often start around £5 but can climb high—in some cases up to 25% of the item’s price. That holiday bargain can suddenly look a lot more expensive.

2. The Impact on Your Credit Score

If you miss a payment, BNPL providers usually report this to credit reference agencies. This means one late payment could lower your credit score, potentially affecting your ability to borrow for a mortgage or car in the future. It is a debt, and treating it seriously is key.

3. The Overspending Trap

BNPL makes instant gratification simple. That ease, however, can make it easy to overspend. Suddenly, you might be juggling several different payment plans from different providers. Keeping track of multiple debts and ensuring they all fit within your monthly budget can be a stressful balancing act.

4. Limited Consumer Protection

You might not get the same level of consumer protection with BNPL purchases as you would with a credit card. If you have a problem—like damaged goods or an item that doesn’t arrive—it can be harder to get a refund or resolve the issue.

Your Gateway to Smarter Festive Spending

Instead of juggling multiple, unregulated debts, consider a straightforward, transparent loan option.

At Gateway Credit Union, we take a responsible approach to lending. When you apply for a loan, we look at your whole financial picture, including any existing BNPL commitments, to ensure the repayments are truly manageable for your household budget.

With a Gateway Credit Union Loan, You Get:

• Clarity: We give you a clear, fixed date when your loan will be paid off.

• No Hidden Costs: We charge no arrangement fees and no penalties for early repayment.

• Support: Our team is here to help you manage your finances responsibly.

If you need a little help covering your festive shopping, see what you may be able to borrow today at www.gatewaycu.co.uk/loans.

A Note on Regulation

It's important to know that consumer champions, including Martin Lewis of MoneySavingExpert.com, have strongly advocated for BNPL to be regulated. The good news is that change is coming! New Financial Conduct Authority (FCA) rules are set to take effect from July 2026, which will bring full regulation, including affordability checks and stronger borrower protections.

For now, Martin’s advice is simple and important: be "very careful" with BNPL, and always remember it’s "a debt."

If you have any questions about BNPL or how a simple, transparent credit union loan could offer you a safer way to finance your holiday cheer, please get in touch with our team!