Buy Now Pay Later vs Traditional Finance: Which Is Better for UK Shoppers?

The UK shopper’s crossroads

BNPL has moved from a niche checkout option to a mainstream financial tool. As of 2025, around two in five UK adults have tried it, with usage rising year on year. It already represents a meaningful slice of online spending and is expected to grow further as providers streamline sign-up and repayments. For many households juggling bills, the pitch is simple: split the cost, keep cash flow steady, and avoid interest when you pay on time. Yet simplicity can conceal complexity. Understanding how BNPL compares with traditional finance can make the difference between convenience and creeping debt.

Traditional credit still anchors the market. Credit cards offer purchase protection under Section 75, rewards, and revolving credit. Personal loans provide structured repayments and fixed rates, often suited to larger purchases. Retail finance at point of sale sits somewhere in between, pairing promotional terms with item-specific agreements. Each route has its own costs, protections, and behavioural nudges that shape how we spend.

The next phase matters. Full FCA oversight for BNPL is due in 2025, aiming to tighten affordability checks and disclosures. That is good news for consumers, but it will not remove the need for careful decision-making. Research shows BNPL users tend to spend more per transaction, driven by the psychology of smaller, spread payments. In a cost conscious environment, that makes budgeting discipline essential.

Kandoo is a UK-based retail finance broker. We help shoppers compare regulated finance options from multiple lenders, so you can see the real cost before you commit. This guide breaks down the terminology, the options, and the trade-offs, so you can pick the tool that fits your purchase, your budget, and your credit profile.

Understanding APR is not just about percentages - it is about knowing what you will pay in real pounds and pence.

Bottom line: pick the product that matches the lifespan of your purchase, the predictability of your income, and your appetite for flexibility.

Who benefits most from each route

If you want predictable repayments for a planned purchase, traditional finance still excels. A fixed-rate personal loan can spread the cost of a big-ticket item over a set term without the temptation to revolve a balance. Credit cards can suit those who repay in full monthly or who want Section 75 protection on purchases between £100 and £30,000. Rewards cards can add value if you are disciplined.

BNPL shines when you need short-term smoothing on modest baskets and can repay on schedule. Younger shoppers are leading adopters, and mobile-first journeys make it fast at checkout. Just be aware that ease can nudge up spend and multiply commitments across several providers. As regulation tightens, disclosures will improve, but the onus remains on you to track due dates, understand fees for missed payments, and avoid stacking instalments that strain monthly cash flow.

Jargon made simple

• BNPL - Short-term instalment credit, often interest free if repaid on time.

• Instalment plan - Equal payments over weeks or months for a single purchase.

• Deferred payment - Pay later in full after a set period, often 14-30 days.

• APR - Annual Percentage Rate expressing yearly cost of borrowing.

• Soft search - Eligibility check that does not impact your credit score.

• Hard search - Full credit check that may affect your credit score.

• Section 75 - Credit card protection for purchases £100-£30,000 with the card issuer jointly liable.

• Promotional finance - Retail finance offering 0 percent or reduced APR for a limited term.

• Credit utilisation - Percentage of your available credit that you use, impacting your score.

• Affordability assessment - Lender checks to ensure repayments are sustainable.

Ways to pay for your purchase

1. Pay-in-3 or pay-in-4 BNPL

   • Split the cost over short instalments, often interest free if you pay on time. Good for low to mid-size baskets and fast checkout approval.

2. BNPL with longer terms

   • Six to 24 months with mixed fee structures. Some plans add interest after promos or charge late fees. Useful for mid-ticket items if terms are transparent.

3. Credit card, repaid in full monthly

   • Interest free when cleared each month, with Section 75 protection and potential rewards. Demands discipline to avoid interest and revolving balances.

4. Credit card, revolving balance

   • Flexible payments but interest accrues, often at higher APRs. Best avoided unless you have a plan to reduce the balance consistently.

5. Fixed-rate personal loan

   • Predictable monthly payments and term, usually lower APR than revolving credit for larger purchases. Requires a full application and credit check.

6. Retail point-of-sale finance via a broker like Kandoo

   • Match with lenders for promotional terms and clear repayment schedules. Suitable when you want regulated agreements and transparent costs.

Pounds and pence at a glance

Who is likely to be approved

Eligibility differs by product and lender. BNPL onboarding can be quick, often with soft checks and dynamic limits. That helps first-time users, but limits may tighten if you miss payments or open several accounts. Longer-term BNPL and retail finance increasingly run affordability checks, especially as FCA oversight lands in 2025, so expect clearer disclosures and more robust verification.

Cards and loans require established credit files, stable income, and manageable existing commitments. If your credit history is thin, consider building it with a low-limit card you clear monthly. For larger items, a personal loan may deliver a lower fixed APR than carrying a card balance, but the lender will assess income, outgoings, and credit conduct. As a broker, Kandoo can introduce you to multiple lenders so you can compare eligibility and rates without applying everywhere at once.

From checkout to cleared balance

1. Define the purchase and lifespan of the item.

2. Choose credit that matches budget and timeline.

3. Check APR, fees, and protections before applying.

4. Run an eligibility check or soft search first.

5. Apply with accurate income and outgoings.

6. Set up automatic payments and calendar reminders.

7. Track spending and avoid stacking instalments.

8. Prepay or refinance if costs rise unexpectedly.

The trade-offs in focus

Red flags before you press Buy

Convenience can cloud judgement. UK studies show BNPL users spend more per transaction, which is great for retailers but risky if you are budgeting tightly. If you already have commitments across multiple providers, small instalments can collide in the same week and strain cash flow. Read the small print on late fees and what happens if you return goods after starting repayments. For credit cards, calculate the real cost if you cannot clear in full. With loans, be sure the term does not outlast the item’s useful life. Regulation will improve clarity, but it will not pay your bill.

Sensible substitutes if BNPL is not right

1. Save first - Use a sinking fund for predictable purchases and avoid borrowing costs.

2. 0 percent purchase credit card - Time limited, but interest free if you clear before the promo ends.

3. Overdraft with a set paydown plan - Short-term buffer only if priced competitively and repaid quickly.

4. Fixed-rate personal loan - For bigger items where structure beats flexibility.

5. Retail finance via a broker - Compare offers and protections in one place.

Quick answers to common questions

Q: Is BNPL cheaper than a credit card? A: If you repay on time, short-term BNPL can cost £0. If you miss payments, fees may apply. Cards are costless if you clear monthly, otherwise APRs bite.

Q: Will BNPL affect my credit score? A: Missed payments can be reported and harm your score. Many providers use soft searches for onboarding, but longer terms may involve hard checks.

Q: What protections do I get? A: Credit cards offer Section 75. BNPL protections vary by provider and contract. Retail finance and loans are regulated credit with defined rights.

Q: Why is BNPL growing so fast in the UK? A: Frictionless checkout, mobile experiences, and budget smoothing are key drivers. Adoption is high among younger adults and women, and usage is expanding across online retail.

Q: What changes with FCA regulation in 2025? A: Expect clearer disclosures, stronger affordability checks, and improved complaint routes. Approval may become more selective, while consumer protection strengthens.

Q: Do retailers benefit more than consumers? A: Retailers often see higher conversion and larger baskets. Consumers benefit if they avoid fees and maintain control. The value depends on behaviour and budgeting.

What to do now

List your upcoming purchases and decide which genuinely need financing. Run eligibility checks to avoid unnecessary hard searches. Compare options side by side on total cost, protections, and term. Set reminders and use automatic payments. If in doubt, choose the product with the simplest path to clearing the balance quickly.

Important information

This guide is for general information and is not financial advice. Credit is subject to status, affordability, and terms. BNPL terms vary by provider. As a broker, Kandoo may receive a commission from lenders. Always check the latest UK regulatory guidance before applying.