For Glasgow care worker Julie, 35 (name changed) Buy Now Pay Later looked like a no-brainer

“Kids grow fast. Splitting a payment into three chunks made sense so I could spread the cost of some new school uniform.” But by the time she’d paid off the £45, another unexpected bill had arrived, this time for a school trip. That one went into Buy Now Pay Later too, and it was the start of a spiral which left Julie with £400 of Buy Now Pay Later debt and £325 in charges on top.

“They just kept increasing the amount they let me put on Buy Now Pay Later,” says Julie, “and it seemed like a good way of spreading the costs out. My gas and electric had shot up too so I started paying for the meter on it. But with the kids’ uniform, the gas and some groceries all the £5 or £10 a week payments soon added up to a huge amount – £50 or £60 a week. I missed one, small payment for £5 and they added a £6 fee on top, that meant I missed another repayment, and soon they’d hit me with fees which were nearly as much as what I had paid for.”

Julie approached Scotcash in despair, but sadly, her story was familiar to our Affordable Credit Advisor Gillian Coats, who says Buy Now Pay Later has become widely used with at least 50% of the people she advises uses it. Gillian feels it’s insidious, dangerous, and pushing people into much worse financial positions than they were without it. “At first people think it’s a convenient rolling facility, and the sad thing is more and more people are using it for daily priorities like groceries and things their kids need, but quickly their balance and credit limit increases and becomes unaffordable. Often they’ll manage their first two or three payments then things get really out of hand. Although lots of people on low incomes are really well prepared, many don’t know what they’re getting into, and Buy Now Pay Later providers are encouraging them to put more and more things onto it without bothering to check whether they can afford the repayments.”

That’s exactly what happened to Julie, a single parent in rented accommodation with a household income of around £16,000 per year from part time work and Universal Credit. “My bills have already gone through the roof this year,” she said, “and when I needed to pay for school uniforms and then a trip it seemed like the safest way to do it. But I can’t believe how easy it was for it to build up, and when I missed a couple of payments they added these enormous fees".  Ultimately we were able to help Julie. “We looked at her income and outgoings and were able to make a small, short term loan she could afford to repay, to pay off her Buy Now Pay Later providers and tide her over,” said Gillian. “But it’s horrifying to see that while things like bank fees are capped, the charges Buy Now Pay Later providers make when people are just a day late aren’t and they soon escalate. They’ve been doing no affordability checks and just don’t seem to care about whether or not people are vulnerable.”