New rules mean stricter checks for Buy Now Pay Later shoppers

Shoppers using Buy Now Pay Later services face new affordability checks that could block their purchases. Buy Now Pay Later has always been a type of loan paid back in parts. It officially became regulated in July. This change brings stricter background checks on whether people can repay. If a user fails the check, the purchase gets blocked. Lenders like Klarna and Clearpay now need regulator approval to work. This gives shoppers better access to refunds and independent complaint rulings. However, new checks on every transaction can block users for the first time. Different purchases have different checks based on how much money is borrowed.

Tips and Help

Sara Williams, a former debt adviser at Citizens Advice who shares tips as Debt Camel, suggests four things if your account closes or your limit drops. Slow down purchases by asking if items are essential. Be careful with buying lots of clothes in different sizes to avoid needing high credit limits. Cancel subscriptions to stop needing loans for past payments. Talk to debt charities for help and food bank vouchers if using these loans for essentials. The government-backed MoneyHelper website offers a guide to find free debt advice. It suggests writing down what you owe to plan repayments. It also has tools to check for benefits and grants, plus a bill prioritiser for missed payments. Users should also watch out for fake debt solutions on social media.

Context

Buy Now Pay Later services let shoppers split the cost of purchases over time without paying traditional credit card interest. As these payment options become more common for everyday online shopping, regulators are stepping in to protect consumers from getting into unmanageable debt. Understanding your spending limits and seeking early advice helps prevent financial stress.