New buy now, pay later rules - what do they mean for you?

Buy now, pay later (BNPL) can be a useful, interest-free way to spread the cost of bigger purchases. But keeping track of your spending can be difficult, so new rules to protect BNPL users are coming into force this week (15 July).

What’s changing?

BNPL lets you delay paying for your online shopping, either by:

• delaying paying for a purchase for 14-30 days
• ‘slicing’ the cost of a purchase into smaller amounts to pay off over several months

But the fact BNPL makes spending so easy means you can end up taking on more debt than you can afford.

So under the new rules, BNPL providers will be regulated by the Financial Conduct Authority (FCA).

If a lender isn’t authorised, it won’t be allowed to offer you BNPL.

Lenders must also carry out affordability checks before you borrow, so before you click “buy”, they’ll have to check you can actually afford the repayments.

The changes also mean:

• you’ll get help if you’re struggling, so if you fall behind or run into financial difficulty, firms will have to offer you support
• you’ll get clearer information and be told exactly what you’re signing up to, in a way that’s easy to understand
• you’ll be able to complain properly, so if something goes wrong and the company doesn’t fix it, you can take your complaint to the Financial Ombudsman Service

Why the new rules matter to you

When used carefully, BNPL can be a useful, interest-free way to spread the cost of bigger purchases.

But people aren’t just using it to cover large expenses.

Instead, more are using it to plug gaps in their everyday budgets and pay for essentials like food.

And without checks in place and the ease of signing up to multiple BNPL agreements, you could easily end up facing repayments you couldn’t afford.

We’ve seen it happen ourselves.

In fact, one in four people now seeking help from Money Wellness has at least one BNPL debt.

Just last month, we supported 4,520 customers with BNPL debt, the highest number recorded for that month and the second-highest figure ever, behind the traditional post-Christmas spike seen in January.

So it's clear that at least some households are increasingly relying on BNPL to cover everyday costs as budgets come under pressure.

Jaquilina’s story

Jaquilina's experience highlights how BNPL can sometimes lead to households falling into difficulty.

She was between jobs when she asked Money Wellness for support, and struggling to keep up with rising living costs while supporting two young children.

To manage day-to-day expenses, she relied on BNPL, building up around £950 across five accounts.

The multiple repayments made budgeting difficult and she started falling behind on priority bills, including over £800 in council tax and energy arrears.

With our help, Money Wellness helped Jaquilina set a realistic budget, start a debt management plan, and access support such as grants and council tax support.  

That put her finances in a more stable position and she could finally start addressing her arrears.

Stronger safeguards for shoppers

With so many people struggling with BNPL debt, we think the new rules are a big step towards protecting consumers, especially those in vulnerable situations.

Of course, some commentators have raised valid questions about the changes.

For example, could stricter checks lead to fewer people using BNPL, even if they’ve used it responsibly in the past?

And could it lead to some consumers turning to more expensive or less regulated forms of credit instead?

We’ll obviously be keeping a close eye on the real-world impact of these new rules and what difference they make to people’s lives.

But we’re hopeful they’ll make sure people don't end up borrowing more than they can afford, while still making sure BNPL remains useful for those who need it.

If you are one of those people using BNPL regularly for essentials, juggling several accounts, or worrying about repayments, then don't hesitate to reach out for support.

Getting debt advice early can help you understand your options and prevent small problems from getting worse.