Buy Now, Pay Later (BNPL) has exploded in popularity in recent years, providing a new and unique opportunity for consumers to spread the cost of goods and services they perhaps can’t afford to pay for upfront.
But how do BNPL cards differ from traditional credit cards? And do they have the potential to affect your credit score? Familiarising yourself with BNPL cards can help you not only understand their appeal but also the various risks involved.
What is Buy Now, Pay Later?
Buy Now, Pay Later (BNPL) is a way for consumers to pay for goods and services in smaller instalments or on a specific date as opposed to paying the full purchase price upfront.
It can be useful for financial emergencies – like a car or home repair – or in situations where you’ve mismanaged your spending and not budgeted enough for your essential expenses. It also rarely includes interest or other fees, meaning you only pay back the amount you borrow.
Some of the things BNPL can be used for include clothing, hotels, electronics, takeaways, holidays, and events.
However, like credit cards, it’s important you only use BNPL if you’re confident you’ll be able to make your repayments as agreed. There can be consequences for missing BNPL payments, such as extra fees, interest charges, and recovery action.
BNPL payment schedules differ depending on the provider, but they typically last between 30 days and three months. Most payments are also deducted automatically, meaning all you need to do is ensure you have enough money in your bank account on the same date each month.
How much debt do you have?
What are Buy Now, Pay Later cards?
BNPL cards operate in the same way as online BNPL services, but the biggest difference is that they can be used in both online and physical stores.
They have been compared to traditional credit cards, but there are some key differences between them. For example, BNPL cards rarely charge interest or late fees, while credit cards do. What’s more, BNPL cards can only be used in certain retailers, while credit cards are accepted almost everywhere.
However, because they’re such a recent phenomenon, BNPL cards still lack the level of consumer protection that credit cards provide. For example, if you use a credit card to buy furniture from a company that later goes bust, most credit card companies have protections in place that would allow you to get your money back while BNPL cards don’t currently have the same safeguards in place.
Klarna – which is one of the most popular BNPL providers in the UK – was among the first to introduce BNPL cards in 2022. Since then, many other providers have introduced virtual cards, which work in a similar way but can be stored on your smartphone.
Do I qualify for a Buy Now, Pay Later card?
If you’re considering a BNPL card, it can be useful to know whether you’re likely to be accepted beforehand. Eligibility criteria will differ between providers and products, but there are some key steps you can take to boost your chances of being accepted.
Generally, as long as you’re aged 18 or over, have a UK address, can provide bank details and proof of identity (e.g. a passport or driving licence), and have a valid bank account from which to make your repayments, you should have no problem qualifying for a BNPL card.
Klarna performs a hard credit check to assess your eligibility for a BNPL card, which will appear on your credit file and affect your credit score for up to two years. Because of this, you might only qualify for lower spending limits or struggle to qualify altogether if you have a poor credit score.
“No fuss, just simple, honest advice. Communication is good and they make the process as easy as they can.”
Will a Buy Now, Pay Later card affect my credit score?
BNPL is often considered safer than a credit or debit card as it rarely includes interest – even after missed payments – and can help you spread the cost of a large purchase if you don’t have the funds to pay for it outright. It can even improve your credit score in some cases as it shows lenders that you’re capable of making repayments on time.
However, it’s important to remember that BNPL is still a form of credit that can affect your credit score. Most providers also share your repayment history with credit reference agencies now, meaning that any missed payments on your BNPL card will be noted on your credit file.
Generally, as long as you make your repayments as agreed, a BNPL card shouldn’t hurt your credit score and you shouldn’t have any problems applying for further credit if you need it.
What happens if I don’t pay a Buy Now, Pay Later card?
If you miss payments on a BNPL card, the provider can take several actions to get you to pay, which we’ve outlined below:
Late fees
When you miss a payment date on a BNPL card, it will usually be rolled over and added to the next payment date. If it continues to go unpaid, you’ll likely be charged late fees.
Before agreeing to a BNPL agreement, always read the fine print and ensure you’re aware of the potential consequences of non-payment.
Interest charges
Most short-term BNPL agreements are interest-free or interest-free for the first 12 months as long as you keep up with your repayments.
However, each provider is different and you should never assume that you’ll never be charged interest regardless of how many payments you miss.
Collection action
While rare, some BNPL providers turn missed payments over to debt collection agencies to recover payments on their behalf.
This can eventually lead to enforcement agents visiting you at your property, which can incur further fees.
Debt help tailored to you
From writing off a large portion of your debt, to readjusting your budget, we’ll find a solution that suits you.
What should I do before using a Buy Now, Pay Later card?
BNPL is not a decision that should be made lightly. Before deciding to fund a purchase with BNPL, consider these crucial factors:
Think about it
Some retailers encourage BNPL by making it the default payment option or offering discounts or free delivery when it’s selected at checkout.
However, it’s important to think about whether you can afford it – even in smaller instalments – and if it suits your financial situation for the full duration of your repayment period.
Read the terms and conditions
Most providers approach late fees and charges differently, so it’s important to thoroughly understand what you’re signing up for before agreeing to anything. Some providers even charge early payment fees.
Having several BNPL agreements at the same time can also make it more difficult to remember the terms and conditions of each – especially if they’re with different providers.
Understand that it’s not regulated
Despite being a popular payment method for several years now, BNPL regulation was only agreed in 2024, and rules are not due to come into force until 2026. This means that, as of right now, you won’t have full consumer protection if something goes wrong with your BNPL agreement or you believe you haven’t been treated fairly.
The Financial Conduct Authority (FCA) assigns a unique firm reference number to all authorised financial services.
Check your credit score
BNPL can negatively impact your credit score so it’s important to have a basic understanding of your financial situation before applying. Some providers perform a hard credit check when reviewing your application, which can remain visible on your credit report and affect your credit score for two years.
Even if a hard credit check isn’t on your credit file, a lender might still ask about BNPL when you apply for credit. Having multiple BNPL agreements can affect your affordability, meaning you’re unable to obtain credit for several years.
Conclusion
Buy Now, Pay Later (BNPL) is a popular way for UK residents to pay for goods and services over a set period (usually between one and three months).
BNPL cards allow you to spread the cost of a purchase made in a physical store. Currently, only a few providers in the UK offer BNPL cards in physical or virtual form.
Whether you use BNPL online or in-person, it’s important to do your research to ensure you fully understand what you’re signing up for.
