Deep Dive

Act Now, Save Later

Emma Nunes-Vaz
January 16, 2024

Buy Now, Pay Later has become an increasingly common term and popular payment method over the past few years - or at least until last month, when it was announced that your Klarna shopping habits will now affect your credit score. However, it’s still used by around 17 million people in the UK, and is especially favoured by 18-30 year olds. It’s described as a form of short-term financing that allows consumers to make purchases and pay for them at a future date interest free (if split into 3); splitting payments into anything from 3-24 instalments. Recently, it’s garnered increasing negative press following a recent survey by Citizens Advice, which uncovered some concerning statistics. 

Out of the 2,288 BNPL users questioned, more than 40% relied on some form of short term borrowing (credit cards, from family or a salary advance) to pay off what they owe - and more concerningly 1 in 3 users have either missed or made a late payment. The survey highlighted a worrying issue: there is a fundamental lack of information surrounding how BNPL works, coupled with a lack of regulation that would otherwise protect the customer and their money. Depending on the provider, it's quite common that the consumer isn't always aware that BNPL is just another form of short term lending, and can have serious consequences if they’re unable to pay back what they owe. This is often to remove any friction from the user experience, as once aware of the T&Cs it is thought that less people would continue with their purchase. Citizens Advice state that the current information provided to consumers ‘results in people struggling to make repayments, facing debt collectors and taking out other forms of credit to repay their BNPL debts’; creating a vicious cycle of debt. The Guardian quotes a Citizens Advice debt adviser Millie Harris, who noted using credit cards and other types of borrowing for repayments was “just relying on one debt to pay off another (debt)”. However, it should be noted that not all providers are the same - some are very transparent and provide a great experience for the customer.  

As I’m sure you’re aware by now, our mission at Incredible is to rid the UK (and soon the world) of bad debt - so we are keen to bring this matter to light. Although splitting up your payments can sound like a smart idea at the time, the stress and uncertainty of adding to your debt is never positive; especially as we move towards a future where these payments could affect your credit score too. However, we understand that cutting back on using these payment features is easier said than done, particularly as 1 in 12 people use BNPL to cover essential items, including toiletries and food. Although stricter regulations are being put in place at some point in the future to make customers more aware of their actions, this isn’t enough to prevent debt piling up. So what’s the answer?

Whilst BNPL’s rising popularity has encouraged us to split most of our payments, it's often for items we may not entirely need; for example, 60% of BNPL users say they have used the service to buy something unnecessary outside of their budget. That’s why, instead of Buy Now, Pay Later - we’re introducing Act Now, Save Later (has a ring to it, right?), and we want to get you involved. The primary element in doing so is registering for early access and signing up to our app, where we’re able to help you save time and money whilst reducing your stress and debt pay-off time; as explained by our CEO in his post ‘How Does Incredible Work?’. Over on our Instagram and TikTok, we’ll also be sharing weekly tips on how to save money, as well as how to live your best life on a budget. We’ll explore Act Now, Save Later further in a future post - but for now, the key message is: 

  • It can be ok to split payments - if you're aware of the consequences and managing them wisely
  • consider if you really need the item you're splitting 
  • instead of using BNPL, think about ANSL - which means making decisions now that your future self will thank you for, like using Incredible to help give you insight into how much you could save by making smarter payments

We’re here to help and support you on your financial journey, transforming you from borrower to saver one Incredible step at a time - and Act Now, Save Later is a great place to start.