Shoppers using Buy Now Pay Later (BNPL) services may find themselves blocked from making purchases due to new affordability checks introduced in July. BNPL providers, such as Klarna and Clearpay, are now officially regulated, requiring them to gain approval from regulators to operate. This change offers consumers greater access to refunds and independent rulings on complaints.
However, the new rules also mandate stricter background checks on a user's ability to repay each BNPL transaction. Failure to pass these checks can result in purchases being declined.
To navigate these changes, especially with the approaching festive season, consumers are advised to consider several strategies. Sara Williams, a former volunteer debt adviser, suggests slowing down purchases to assess if they are essential or can be postponed. Being more selective about what is bought can also reduce the need for a high credit limit. Additionally, canceling unused subscriptions can help prevent a situation where BNPL is used to cover the cost of previous payments.
For those struggling with BNPL repayments or other forms of debt, seeking help is crucial. The government-backed MoneyHelper website offers a locator for free debt advice services. It also provides tools to help individuals list their debts, plan repayments, and determine if they are eligible for any benefits or grants. Consumers are also cautioned to be wary of unofficial debt solutions promoted on social media.
The new regulations aim to provide a more secure lending environment, but they also place a greater onus on consumers to manage their finances carefully when utilizing BNPL services.