In the world of credit, Buy Now Pay Later, or BNPL, is not anything new. It has been around for donkey’s years, but in the past few years it has become fashionable again, pun intended. This due to the fact many clothing web sites use Buy Now Pay Later to aid in increasing sales.

Add to this the recipe of Internet sales going up, a pandemic where no one could go out to buy clothes, and you have a recipe for a credit disaster, or increased sales, or both.

And while BNPL is an easy way to get the items you need and make payments, don’t kid yourself that this is not a form of credit….because it is a form of credit!

So should you for whatever reason not be able to make the payments, the account or debt can be given to a collection agency to be collected, and can be reported on your credit file, which can lower your credit score.

According to some debt charities, one-in-ten shoppers wind up being chased by a collection agency for this form of credit.

The first thing to keep in mind is that Buy Now Pay Later is indeed a form of credit. Many don’t realise this, as in some instances the offer of paying later is made at the checkout point.

The other factor to keep in mind is that the credit offered to you by Buy Now Pay Later may in reality be a third party finance company.

You also can be charged late fees, which can increase the balance you owe.

And many of the BNPL web sites do not inform shoppers of the consequences of missed payments or defaulting on the credit that has been extended to them.

Another aspect of BNPL is that shoppers may spend more than they intended. The thought process being, I’ll pay for it later, in the hopes their finances may improve.

We just need to be aware that Buy Now Pay Later is a form of credit, and as such if not repaid, can possibly be given to collection agencies to chase you for payment, and possibly damage your credit rating.

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