/ Money

Have you been hit by ‘buy now, pay later’ pitfalls?

Retailers are keen to advertise 0% interest ‘buy now, pay later’ offers in the run-up to Christmas. While these deals can provide useful financial relief for hard-up families, are they really as helpful as they appear?

If managed well, the ‘buy now, pay later’  deals can be a useful way to help spread the spiralling costs of Christmas.

But beware; if you don’t keep your eyes on the upcoming payments, you could end up in repayment misery.

Watch out for these finance pitfalls

Earlier this year we revealed that if you miss a payment, some retailers will charge interest on the whole balance backdated to the date you ordered.

For example, at the time of research we found that buying £350’s worth of jewellery on Argos’ 12-month ‘buy now, pay later’ deal would be interest free if you repaid all of it within 365 days. But if you were just a day late you would have incurred interest of 29.9% on the whole balance due. That would’ve been more than £100.

Littlewoods also offers ‘buy now, pay later’ deals and was recently criticised for selling items at higher prices compared to buying the items upfront from other shops. The moral of the story is to always shop around and read all the details before signing up to these deals – and not to be drawn as soon as you see ‘0% interest’.

Handy alternatives to ‘Buy Now Pay Later’ deals

You can create your own ‘buy now, pay later’ deals with any retailer if you invest in a 0% purchases credit card.

These cards charge no interest on purchases made during the first few months of owning the card, provided you meet the minimum monthly repayments. So, you’re likely to save money by applying for a Best Rate 0% purchases credit card and using it to buy the product at the cheapest price available.

Whatever form of credit you use, it’s essential to create a repayment plan that you can stick to in order to avoid excessive interest charges.

Consider setting aside a certain amount each month and placing it in a savings account so you can cover the full amount due at the end of the interest-free period.

Have you been caught out by a ‘buy now, pay later’ deal? What’s the biggest late repayment penalty you’ve encountered? What do you think is the best way to fund big-ticket Christmas purchases?


Providing the terms are made clear to you when you make the purchase then you should not feel “caught out”. Similar to missing your credit card monthly repayment by a day and being charged interest from day one plus a default fee.
The difficulty is accepting that we must live within our means – why buy your example of £350 of jewellery from Argos if you can’t afford it?

It would be interesting to know what percentage of people avoid using credit. If you can, it is a good way of having more money to spend.

I appreciate that unemployment, illness and other problems can force people into using credit, but it is worrying that so many do so routinely in the absence of such difficulties. As with other credit cards, 0% purchases credit cards could be very expensive if you are not careful.

It is about time that interest charges are capped rather than letting companies charge what they want. I recall that some banks were charging substantially more than others for overdrafts, for no obvious reasons.

B Jones says:
9 December 2014

I only use % cards. I set up a savings account(last 2 have been 3% and 4% interest). I make sure that what is in my savings account covers my % card. I check when I have to pay it off and do so 2 weeks in advance to make sure. In the last 2 years I have had interest of over £100. All cards are worthwhile if used wisely and make sure you keep an eye on dates and amounts.

Many ‘interest free’ deals have an admin fee for repaying before the interest-free period ends. Typically this is around £29. To avoid paying interest you have to pay this fee and redeem your debt before the interest-free period ends. Effectively, you are paying interest! The rate depends on how big the loan was and for how long. This kind of deal should not be allowed to be advertised as interest free.