‘Buy now, pay later’ (BNPL) may be a new term to you, but the chances are you have used it or have thought about it.

Simply put, it’s a way to pay that lets you borrow money quickly so you can buy something now. You then pay back this money later.

Some will let you do this in one payment. But, more often than not, you’ll pay back through smaller amounts over a set amount of time. So, you could buy a £120 bike at no cost today. Then over the next year you could pay back £10 a month.

You do also need to be aware of costs, as some BNPL options will be fee and interest free, but not all. You’ll learn more about these kinds of added costs in this lesson.

We’ll also help you learn more about what BNPL offers. We’ll give you tips to help you stay safe while buying this way. You’ll learn that though BNPL can be a helpful product, it is still debt. So, you need to use it safely and as part of your budget.


  • Be able to use Buy now, pay later
  • Be more able to balance the risks and benefits
  • Be able to test if it’s right for your purchases
  • Manage these payments as part of your budget

Read time:

15 mins

Chapter 1

What is it?

Read time:

3 mins

Spread or delay your costs

Spread costs

Pay many small amounts rather than one bigger payment

Delay costs

Get the things you need now, even if you can only pay later

Interest fee

Most BNPL options won’t charge you interest

Fee free

Most BNPL options won’t charge you fees

Be aware

Though BNPL can be fee and interest free, not all are. Some will charge you for using BNPL. Others might have costs like late fees for missing payment dates.

Some examples

We’ve all been there. An unexpected cost, a more expensive month than you planned.


Here are some times when BNPL might be helpful:

  • Your washing machine has broken, and you don’t have enough to buy a new one
  • You’ve not got enough right now to buy your family something for Christmas
  • You need new clothes, but the cost of what you need now means you have less money for other things


What does it look like?

There may be BNPL options both online and in store. You select a lender from those offered by the place you’re buying from. They may offer you one or a few BNPL lenders to pick from.

Chapter 2

What options are there?

Read time:

4 mins

What kinds of BNPL can you pick from?

The BNPL options have lots of features for you to think about. These features can make one BNPL option a good choice for you over another.

In this next chapter, we’ll look at the different features that can equip you to be safer when looking at options.


Features to think about

Who provides it

Make sure the lender providing the BNPL is one you trust. If you’re not sure, look at online reviews. These can help to check the lender is reputable and you’re getting a good service. Sometimes there will only be one BNPL option offered. Where the option given isn’t one you trust fully, then look for other shops, products or options.


Monthly payments

The amount you’ll pay monthly will depend on a few things. First, the bigger the cost, the bigger the repayments. This is not always true, but you can usually expect to pay more towards bigger purchases.

It will usually also depend on the amount of time you want to pay over. So do look at your options and what will work best for you. Think about what you can afford and how long you can afford to pay it for.

Some lenders will offer lots of options and allow you to customise them, others won’t.


Time period

You can also have different options on the length of time you repay for. From weeks to months to years.

Think about how long you want to and can afford to pay the monthly payments for.

If you’re agreeing to pay for a long time, your situation may change, and you might find it harder to pay the amount over time.


Fees and interest

Many BPNL options will be interest and fee free. This means you won’t need to pay the provider for the service on top of the cost of your purchase. It’s not always the case.

Be sure to check the details of the BNPL option. If they charge a fee – is it worth this added cost? These fees might be for late or missed payments. It can also impact your credit score. We’ll cover this more in chapter 4.

Some may charge interest. Which is where you pay the lender a regular amount on top of your payments.

Both of these are ways that the lender can make money on the money you borrow. You need to think about the benefits of BNPL in balance with these costs. Plus remember, if you are going to use BNPL, there are free options too.



With such a large range, one of the things you need to check for most is flexibility. How open are your lenders to change?

Will the lender help if you have a life change that means you can’t pay? Can you pay the whole amount sooner if you want and are able to?

Some lenders will be open to changes and make them easy. Others will have strict rules about payments. Make sure you fully understand what you’re agreeing to when you use buy now, pay later.

Chapter 3


Read time:

2 mins

The positives of BNPL

By now you may already have a list of benefits. But, let’s make sure you have a clear list of all the ways BNPL can help.


It might help if:

  • You need something and will never be able to afford the cost in one go
  • The cost is easily within your budget, but you can’t afford the full amount right now
  • You find it easier or less stressful to pay smaller amounts over time


And the main benefits are:

  • It can reduce the stress of making large purchases
  • It can be a low/no cost way to borrow money
  • It’s widely available, with lots of companies now offering BNPL online and in stores

Chapter 4


Read time:

4 mins

What should you think about?

As with the benefits, you may already be forming a view of the risks. We’ve talked about the potential costs. Plus, one of the main things we’ve covered so far is the risk of delaying debt. But, what does this mean and what other risks are there?


Delaying debt

By using BNPL, you are effectively moving the cost to later dates. This is fine if you are able to pay and keep paying these. People do sometimes use BNPL to buy things on the hope that they’ll be able to afford the cost later.

This can lead to issues. The chances are, unless you’re expecting an increase in your income, you’ll find yourself in a similar position when paying later.

There are things you can do to lessen this risk. If increasing your income isn’t possible, you could try to look at your spending. Look to cut services you don’t need and shop around for better deals on things like utilities.

The other thing you can do is make your BNPL costs part of your budget. We’ll help you prepare to do this in chapter 5.


Your credit record

Not making your BNPL payments on time can impact your record. Everyone has a record that lenders use to decide if you are okay to lend to. It is based on how well you’ve borrowed and paid back before. This is called a credit record. Companies use this record to give you a credit score.

Not making your BNPL payments can lower your score. It tells lenders that you are less likely to pay back money they lend you on time or at all.

This means that you should think about both benefits and risks when deciding to use BNPL. Think about the benefit of using it for your purchase and your ability to repay.

Say you use it now to buy something you want now but can’t afford. If you miss a payment, it might lower your credit score. This may then mean you’re less likely to be able to borrow if future, even for something essential like paying bills until you get paid.


No payment protection

BNPL doesn’t offer the same security as some other ways to pay.

For purchases over £100 on payment options like credit cards, you can get immediate help from the lender if there’s an issue. So, if you receive a damaged order or never gets delivered, you can ask for a refund from your lender. They, and the shop you ordered from, have equal responsibility to refund your money.

The same legal rights do not protect BNPL payments. Even if you use a credit card when you sign up to buy now, pay later.

If you’re using BNPL, you should check what protections the lender has put in place. Some will have policies to help offer similar support if a product is not quite right. Even if they do, remember these are just policies so they’re not as secure as payments that are protected by law.

Test your knowledge

Answer this question by selecting one answer from the three options provided.

That's not quite right!

Hint: No purchases made using BNPL will legally entitle you to a refund

That's right!

Chapter 5

Stay on budget

Read time:

2 mins

How to budget

We have looked at why a budget can help you make choices about BNPL. So, how do you create one. Let’s look at the main steps.

Step 1

Note down how much money you have to spend each month. Money you have been paid or are entitled to

Step 2

Write a list of any money you have going out on things like bills and everyday spending

Step 3

Look at the difference between your income and costs

Looking at your income and costs compared, you can get a clearer view of what money you have to spare, if any. Do look at how this might change over coming months, as BNPL is a potentially long-term new expense. If your costs are higher in any month – will you still be able to pay.


If you don’t have money to spare

It’s best that you are aware. This means you can start to look at ways to cut back, increase your income or you can go for support. To get help with this, look at our lessons on budgeting here: Budgeting essentials.


If you do have money to spare

That’s brilliant and there’s plenty of ways you can use it. Making BNPL flexibility is just one of those ways. Saving, investing, buying things you need outright are other options.

Chapter 6

Is it for me?

Read time:

2 mins

Assessing if BNPL is right for you

Life happens and there are clear benefits of paying later at no cost. So, it may seem tempting, as BNPL can be a helpful option for many people and payments. BNPL is a form of borrowing though. If you can't afford something, you may be moving today’s issue to later.

Using BNPL is a very personal choice. You need to think about BNPL options along with the rest of your money. This means you need to look at your full budget and build your BNPL payments into it.

You need to decide if BNPL is right for you.


Re-check your budget with every new BNPL choice you make.

Remember to think about:

  • The value of using BNPL for the purchase you’re making
  • Re-checking your budget for this and future months to make sure you can make the repayments
  • If you’re delaying debt
  • If there are any fees or interest and if it’s worth paying them
  • Whether you feel comfortable your ability to pay will stay the same for length of the BNPL agreement
  • You understand and are happy to take on the risks
  • If there are any other options to help pay for the item that might suit you better.

Related learning links


Bank of Scotland Academy is committed to providing information in a way that is accessible and useful for our users. This information, however, is not in any way intended to amount to authority or advice on which reliance should be placed. You should seek professional advice as appropriate and required. Any sites, products or services named in this module are just examples of what's available. Bank of Scotland does not endorse the services they provide. The information in this module was last updated on 23rd February 2024.