Shoppers warned about “risky” new buy now, pay later option at big-name brands

Sainsbury’s Warns Shoppers About “Risky” Buy Now, Pay Later Option

Shoppers are being cautioned about a new buy now, pay later payment option available at three major brands. Sainsbury’s, in partnership with Klarna, now offers buy now, pay later (BNPL) options at Argos, Habitat, and Tu clothing.

While this payment method may seem convenient, experts are warning consumers about the potential risks involved. Andrew Hagger, a personal finance expert, emphasized that BNPL is a form of borrowing that must be repaid on time, similar to credit cards and overdrafts. Using BNPL as a go-to payment method can lead to financial difficulties in the long run, with the risk of accumulating debts that are difficult to manage.

Sainsbury’s is not the only retailer to introduce Klarna as a payment option recently. Boots also extended its partnership with Klarna in March to offer flexible payment options online and through its app. Other retailers, such as Asos, Benefit, and B&M, also provide BNPL as a payment option.

One of the key concerns raised by experts is the lack of regulation in BNPL lending. Sarah Coles, head of personal finance at Hargreaves Lansdown, highlighted that users of BNPL do not have the same protections as regulated borrowing. If consumers encounter difficulties with repayments, they may not have recourse to the Financial Ombudsman Service for assistance.

BNPL products have gained popularity among consumers for allowing them to defer or spread the cost of purchases interest-free over a set period. However, users may incur fees for late payments, and the lack of regulation means they are not subject to the same protections as traditional credit agreements.

To use BNPL without facing financial challenges, experts recommend being cautious and mindful of repayment deadlines. Consumers should also explore other borrowing options, such as credit unions, to find the most cost-effective solution for their financial needs.

If you find yourself struggling with debt, there are organizations that can provide free assistance and advice, such as Citizens Advice, StepChange, National Debtline, and Debt Advice Foundation. It’s important to seek help from reputable sources and avoid claims management firms that may charge high fees for debt relief services.