Table of Contents
- How Does Buy Now, Pay Later Work?
- What are the Risks of BNPL?
- How to Use BNPL More Wisely This Christmas
- Why We Keep Talking About BNPL
- Need Help with BNPL Debt This Christmas?
The build up to Christmas can be an exciting time for many people, but as costs continue to rise, so does the financial pressure. StepChange found that around 4 million people turned to credit last Christmas and 1.5 million used Buy Now, Pay Later (BNPL). With costs continuing to rise, the same trend is set to repeat this festive season.
BNPL can offer a flexible way to pay, but when payments are added to everyday bills the numbers creep up. That’s when it’s easy to miss installments and high interest rates kick in. At PennyPlan, we help people struggling with Buy Now Pay Later repayments get their finances back on track. In this latest blog, we take a look at how BNPL works, what the risks are and how to use it wisely.
How Does Buy Now, Pay Later Work?
BNPL lets shoppers spread the cost of a purchase into smaller installments. Some plans stay interest-free if every payment lands on time; others add late fees or interest once the grace period ends. It’s fast, simple, and built into most online checkouts.
That convenience is exactly what makes it risky. It’s easy to take out several plans across different retailers without realising how many you’ve opened. A jumper here, a toy there, maybe the big food shop too. Everything feels affordable in the moment, but the total can grow quietly in the background.
What are the Risks of BNPL?
Buy Now Pay Later can be helpful, but the risks can slip under the radar, especially at times like Christmas, when spending feels unavoidable and credit is presented as part of the solution rather than another commitment to manage.
Missed payments carry costs
Late or missed installments often come with fees. Some providers also report them to credit agencies, which can affect borrowing in the future.
Debt builds faster than expected
Even without interest, several small BNPL purchases can create one large repayment month — usually January, when most budgets are already stretched.
Refunds don’t move instantly
If you return an item, the refund may take time to process. In the meantime, the next installment can still leave your account, sometimes triggering overdrafts or missed payments.
Protection is limited
Most BNPL services aren’t regulated by the Financial Conduct Authority (FCA). Purchases don’t have Section 75 protection like credit cards do, and disputes can’t be escalated to the Financial Ombudsman Service.
It’s important to note these details may not be obvious when checking out, so be sure to check any terms and conditions. Understanding them keeps you in control of what you’re agreeing to.
How to Use BNPL More Wisely This Christmas
Handled carefully, BNPL can help manage short-term costs. The key is staying organised and setting limits that feel realistic. And although these steps sound simple, they’re often the difference between short-term relief and long-term stress.
Treat it as credit, not convenience.
BNPL is still ‘borrowed’ money, even if it looks simple on the screen. Only take out what you know you can afford to repay.
Keep a running list
Write down every active plan, including payment dates and totals. Seeing it all in one place will help prevent surprises later on.
Check the small print
Each provider has different policies on fees, refunds, and payment schedules. Read them before you agree to their terms.
Avoid stacking new plans
Clear one balance before opening another. It keeps spending visible and repayments predictable.
Use savings where possible
Paying upfront even for smaller items means fewer bills waiting in January.
Why We Keep Talking About BNPL
Every year, more people rely on BNPL to keep up with Christmas costs. It’s understandable, the cost of living has risen faster than most pay packets, and many just want to make the season feel normal.
At PennyPlan, we talk about BNPL because we see what happens when it becomes unmanageable. Nobody plans to start the year worrying about repayments, but it still happens. Our goal is to make sure people know what they’re signing up for and feel supported if things get out of control.
Need Help with BNPL Debt This Christmas?
If you’re struggling to manage your Buy Now, Pay Later repayments, you’re not alone. We help people manage Buy Now, Pay Later debt with providers like Klarna, Clearpay and PayPal.
At PennyPlan, our advisers help people understand what’s happening with their finances and what can be done next. We provide free and confidential advice to help you get your finances back on track.
If you’re feeling the pressure, you don’t have to wait for things to get worse – talk to our team today.
