Martin Lewis has said that people are using the Buy Now, Pay Later option as a “lifestyle choice” rather than what it is, getting yourself into “debt” – and it’s something that needs to be stopped, he warns.
The Money Saving Expert (MSE) founder said that people are getting themselves into debt over items such as a takeaway, urging people to stop doing this and only do it if they absolutely need to such as for an emergency car or home repair to help spread the cost. Millions of people use Buy Now, Pay Later firms, such as Klarna and Clearpay reports MSE, and this is something you may have seen when shopping online or in-store.
However if something goes wrong, finance experts are warning users that they could incur late fees and marks on your credit file. Talking about the “explosive growth” of Buy Now, Pay Later debt, he recalled payday loans and said that the treasury committee in 2020 were warned they can’t make the same mistake . So when a new form of debt grows, “we need to regulate it sooner rather than later”, he urged and despite talks four years ago, nothing happened to regulate it.
Expressing how happy he was this time round, the money guru said: “I was delighted when the Chancellor [Rachel Reeves] called me yesterday to say we’re doing it. I mean there’s gonna be a six week consultation, then it goes to the regulator, then as a year long consultation so it’s not gonna happen until January 2026.
“But Buy Now, Pay Later, which is you ubiquitous when you shop online you’re asked ‘Hey, do you wanna spread the payment?” which should really be phrased ‘Hey do you want to get into debt’ because it is a debt”, he stresses. “It’s not necessarily a bad thing, it’s interest free and if you got a plan budgeting one off purchase that you need to make for something like paying for emergency plumber or car repairs, well use it to spread the payment. But it’s marketed as a lifestyle choice, it’s put on instant buys – it on takeaways.
“Why would you get yourself into debt for a takeaway? Why do we allow firms to market debt for buying a takeaway? The reason we allow it is it’s been completely unregulated and it’s been a Wild West until now.”
You can read more on what Martin Lewis has to say about the Buy now pay later which set to be regulated by visiting moneysavingexpert.com.