The Dangerous Rise of Buy Now, Pay Later

Picture this – you find the perfect winter boots that will go with absolutely everything. After all, your current winter boots really are past their best (and to be honest, they never fit quite right and would have been a lot more comfortable with a slightly lower heel) so while you know the difference between a need and a want, this feels like a situation that is kind of in-between the two.

You want/need these boots but they cost an arm and a leg (although we all know the trick about dividing the cost price by the number of times you are going to wear/use something to get the REAL price right?) and we don’t “technically” have all the cash on hand to pay for them, but payday is just around the corner, so hey, why not just buy now and pay later?

Sounds like a great idea, right? Get what you really want NOW, and pay it off over your next few paydays, no credit check required. Kind of like reverse layby. What could be better?

While it may seem like a great idea, buying now and paying later can lead to purchases that just wouldn’t have happened if you had waited a few days or weeks while you saved up. The urge may have left you; you may have decided on a different priority for your money, or you may have just changed your mind. Spending money in real-time, money straight from your bank account can feel like a more emotionally connected transaction, which can give you more pause for thought. Shopping with a BNPL method can feel a little disconnected from your money, removing some of the tension around your decision, and making that purchase an easier call. BNPL is committing your future income to a (potentially impulse) purchase. Still sound like a good idea?

With old-fashioned layby (for those of you that remember this!) – you decided what you wanted, you committed to it, then paid it off a little at a time, and collected the goods once you had finally paid the correct amount of money. This trained your brain to delay gratification, created great savings habits, and built up the anticipation of buying that awesome thing that you really wanted. How great does it feel to buy something after the discipline of saving up for it?

With BNPL, you GET the object of your desire upfront, then are stuck paying it back while the excitement of this shiny new object is waning. Where is the fun in that, especially if buyer’s remorse has kicked in?

Why are we even using BNPL? Because we want something but do not have the money to pay for it. If you don’t have the money to pay for it, you CAN NOT afford it. I can’t stress this enough. If you want something so badly that you are prepared to commit your future income to it, why do you not want it so badly that you aren’t prepared to commit your current income to it, by saving up?

A friend of mine waits at least one week between seeing something she wants and actually buying it, and a lot of the time, the desire leaves and she changes her mind about the purchase altogether, saving her a heap of money.

Credit reporting company, Centrix, reported that at the end of Mar 2023, 10.5% of all BNPL loans were in arrears. Proof that just because you CAN borrow the money, doesn’t necessarily mean that you should.

While it may sound old-fashioned to save up for the things you want instead of buying now and paying later, it can certainly save you from the headache of debt and potential buyer’s remorse.

“Credit buying is much like being a drunk. The buzz happens immediately, and it gives you a lift. The hangover comes the day after.” – Joyce Brothers