The Truth About Buy Now Pay Later: Fees, Risks and How to Use It Responsibly

BNPL in Britain today

Buy Now Pay Later has moved from niche checkout add-on to a mainstream way to spread the cost of everyday purchases. In the UK, adoption has accelerated. By 2025, around 42% of adults have used BNPL at least once, equivalent to roughly 22.6 million people, up from 36% in 2023. Market forecasts suggest total UK BNPL transactions could rise from about £29.85 billion in 2024 to nearly £47.27 billion by 2029. That scale matters. It tells us BNPL is no longer just a tactic to fund trainers or tech. It is now a visible part of household cashflow management.

Yet the picture is nuanced. UK Finance reports around one in four adults used BNPL in 2024, with the highest usage among 25 to 34 year olds. Meanwhile, FCA research highlights that unregulated BNPL remains widely used, particularly by those with lower financial resilience. TransUnion finds a growing share of people use BNPL for purchases under £50, covering weekly essentials such as groceries and takeaways. This underlines a tension: BNPL can smooth short-term costs, but it can also encourage overspending if not managed carefully.

Understanding APR is not the whole story with BNPL because many products market interest-free instalments. The real focus is total cost, late fees, and whether repayment fits your budget without crowding out essentials. Citizens Advice has shown that clearer disclosure of risks at checkout improves consumer understanding. The lesson is simple. Transparency helps you choose well.

At Kandoo, a UK-based retail finance broker, we see BNPL as a tool. Used well, it can be useful for cashflow. Used carelessly, it can add friction to your finances. This guide sets out how BNPL works, who it suits, the costs to watch, and the checks that put you in control.

BNPL should fit your budget, not reshape it.

Who this guide will help most

If you are considering spreading the cost of a purchase, from a new appliance to a weekly shop, this guide is for you. It is particularly relevant if you are in your twenties or thirties and prefer mobile-first checkout journeys, as usage is higher among younger adults. It is also helpful if you have never used credit before and want to understand how BNPL differs from credit cards or overdrafts. Finally, if you have felt the pinch of higher living costs and are tempted to split payments for smaller items, the sections on fees, missed payments and safeguards will help you decide when BNPL is a sensible tool and when to step back.

The terms you will see most

• BNPL: Short-term credit that lets you split payments over time, often interest-free if paid on schedule.

• Instalment plan: Set number of payments on fixed dates, typically weekly or monthly.

• Pay in 30: Deferred payment due in full after a short period, usually 30 days.

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

• Hard search: Credit check recorded on your file that may affect your score temporarily.

• Late fee: Fixed charge for missed or delayed instalments.

• Affordability check: Assessment of whether repayments are manageable based on your circumstances.

• Unregulated BNPL: Products outside full FCA consumer credit rules, offering fewer protections.

Ways to use or avoid BNPL

1. Pay in full at checkout

   • Safest option if you can afford it today. No ongoing commitment, no fees.

2. Pay in 30 days

   • Useful if you expect funds soon and want to try before you pay. Track the due date closely.

3. Pay in 3 or 4 instalments

   • Spreads cost across pay cycles. Set a calendar reminder for each instalment.

4. Longer-term finance with interest

   • For larger items, regulated finance may include interest. Compare APR, fees and total cost.

5. Use a credit card instead

   • May offer Section 75 protection for purchases £100 to £30,000. Interest applies if not repaid.

6. Use a debit card and a sinking fund

   • Plan purchases by saving ahead. Zero fees and no credit impact.

7. Avoid BNPL for essentials

   • Groceries and bills are best funded from your budget, not credit. If you rely on BNPL for essentials, review income and outgoings or seek support.

If your plan relies on everything going right, the plan is too tight.

What it can cost and why it matters

Who is likely to qualify

Eligibility for BNPL varies by provider and product. Many short-term, interest-free plans use soft searches and basic checks, focusing on your recent payment behaviour and order details rather than a full credit file assessment. Regulated instalment credit for higher-value items typically involves a hard credit check and a fuller affordability assessment. Usage is more common among 25 to 34 year olds, and women are slightly more likely to use BNPL than men, but approval is not guaranteed for any group. Providers consider signals such as your payment history with them, the size of the basket, and whether you have outstanding balances elsewhere. If you have low financial resilience or a recent record of missed payments, acceptance may be lower, and unregulated products could carry fewer protections. Always read the terms to understand checks, reporting, and what happens if a payment fails.

From checkout to clear - the typical journey

1. Choose BNPL at checkout and review the key terms.

2. Complete identity checks and a soft or hard search.

3. Select pay in 30 or instalments that suit payday.

4. Add a debit card and confirm the payment schedule.

5. Receive plan confirmation and calendar reminders.

6. Track deliveries and request returns promptly.

7. Ensure funds available on each due date.

8. Clear the balance and close the plan.

Upsides and trade-offs at a glance

Red flags to consider before you commit

Using BNPL for small, frequent purchases can disguise pressure on your budget. Evidence shows millions use BNPL for baskets under £50, including groceries and takeaways. If that sounds familiar, step back and check whether your essentials are affordable without credit. Younger adults are the heaviest users, and unregulated plans are common, particularly among people with lower resilience. That combination increases risk because consumer protections can be thinner. Marketing messages often emphasise no interest but give less attention to late fees, so scan the disclosure box for total cost and what happens if a payment fails. If you already have multiple plans running, map out every due date against your paydays. If the numbers only work when everything arrives on time and no unexpected bill lands, the plan is fragile.

Alternatives if BNPL is not right today

1. Delay and save using a weekly sinking fund. Simple and fee-free.

2. Use a 0% purchase credit card and set a fixed repayment plan.

3. Consider regulated fixed-sum retail finance for larger items with clear APRs.

4. Buy second-hand or refurbished to cut the upfront price.

5. Ask the retailer about price-match or seasonal discounts before buying.

Your questions answered

Q: How common is BNPL in the UK? A: Very common and growing. Around 42% of adults have used it at least once, and one in four used it in 2024. The market could approach £47 billion by 2029.

Q: Does BNPL affect my credit score? A: It depends on the provider. Some use soft searches that do not affect your score. Missed payments may be reported and could impact your credit file.

Q: Is BNPL suitable for everyday essentials? A: It is possible but risky. Many people use it for low-cost purchases under £50. If essentials require credit, review your budget or seek advice.

Q: Why do people overspend with BNPL? A: Spreading payments can reduce the perceived cost, and studies show BNPL users often spend more than non-users. Setting a spending cap helps.

Q: Are all BNPL products regulated? A: No. The FCA has found significant use of unregulated BNPL, especially among 25 to 34 year olds and vulnerable groups. Fewer protections may apply.

Q: What safeguards should I look for? A: Clear disclosure of late fees, affordability checks, easy refund processes, and calendar reminders. Choose providers that explain costs up front.

Make the total cost and due dates your north star.

What to do next

If BNPL still fits your needs, choose the smallest plan that gets the job done and set reminders for every due date. If you are unsure, compare alternatives like 0% purchase credit cards or regulated finance with clear APRs. If you rely on BNPL for essentials, consider speaking to a free, impartial debt advice charity. Kandoo can help you assess regulated retail finance options where appropriate.

Important information

This guide is general information, not personal advice. BNPL terms vary by provider and may change. Always read the terms, check fees and affordability, and consider seeking independent advice if you are unsure. Research references include UK Finance, FCA, Citizens Advice and TransUnion UK.