UK Consumers Turn to Point-of-Sale Credit

A Shift in How Britain Shops

John Lewis, Currys, even your local bicycle shop – these days, it seems almost every British retailer offers to "spread the cost" at checkout. This rise in point-of-sale (POS) credit is changing how UK consumers experience shopping. Traditionally, credit cards and bank loans were the go-to for large purchases. Now, Pay in 3, buy-now-pay-later (BNPL), and tailored retailer finance schemes are mainstream. According to UK Finance, POS finance grew by over 70% between 2020 and 2023, and the trend shows no sign of reversing.

There’s no mystery to this transformation. Flexible credit appeals in an uncertain economy. For shoppers, the allure is clear: immediate access to goods without a lump sum payment, often with a promise of zero interest for the short-term. Amid rising living costs and stagnant wages, these products promise purchase power without breaking the bank—at least at first glance. Yet, with simplicity can come misunderstanding. Not all agreements are equal, with terms, conditions, and the risk of fees or interest lurking for those who don’t keep up repayments.

The Mechanics Behind Retail Finance

It’s worth asking: how does retail finance actually work—and what should consumers watch for? At its core, point-of-sale finance allows customers to split payments across a defined period. It may be interest-free, or subject to APRs that require closer scrutiny. Larger purchases, from sofas to solar panels, now come attached to “affordable monthly payments” calculated on the spot. Providers such as Klarna, PayPal Credit, and store-specific lenders have become as familiar as Visa or Mastercard logos at checkout.

This accessibility opens doors. Recent FCA findings show more than 14 million UK adults have used BNPL at least once in the past year. Many cite budget management and avoiding high credit card interest as key motivators. For the financially savvy, this can be a sensible way to manage cashflow and take advantage of 0% APR offers.

However, responsible borrowing is essential. Some products escalate into high APR territory if payments are missed or the interest-free period concludes. Shoppers must read the small print: late fees, credit checks, and potential impacts on credit scores are part of the equation. Awareness and planning are crucial to avoid debt traps that can undermine the very convenience retail finance seeks to offer.

Key Points to Remember:

• Not all retail finance is zero-interest – check the APR and total cost.
• Late or missed payments can incur fees and impact your credit profile.
• Consider whether you need the purchase or are enticed purely by ease of finance.
• Set reminders for payment schedules to avoid surprise costs.

The Future of Shopping on Credit

Is retail finance the new normal for UK consumers? Signs point to yes. With the market’s rapid expansion and technological integration at checkout, POS credit has become embedded in the modern shopping experience. While it brings flexibility and control to the consumer, the responsibility for sustainable borrowing lies with each individual.

Regulators are taking note. The FCA is tightening its oversight, aiming for clearer information and fairer product terms. For buyers, this means a renewed emphasis on transparency, education, and careful budgeting.

Take Charge of Your Next Purchase

Ready to make a large purchase? Whether it’s a household appliance, electric bike, or energy-efficient upgrade, explore your retail finance options with a critical eye. Compare offers, read the terms, and think ahead. Used wisely, POS credit could offer the flexibility you need—without the sting of future regret. For more guidance on responsible borrowing and the latest retail finance trends, visit Kandoo’s resource hub today.