Buying Kitchen on Credit Card and Buy Now Pay Later

audigex

Hi

I'm buying a kitchen worth ~£10k (inclusive of some building/electrical work and a new boiler), and intend to pay using Buy Now Pay Later, and my Credit Card

The plan is to pay £5k on my Credit Card (0% for 24 months), of of which I'll pay off £3k. The other £5k will be on buy-now-pay-later (again, 24 months), leaving me with £5k + £2k of "pay later" between the two

Paying it off isn't an issue, but I'm just wondering how this effects the Section 75 protection: since I'm paying on my Credit Card, am I right in saying that the Credit Card would cover the entire amount? Or alternately that the credit agreement with the kitchen company would cover the entire amount?

I'm slightly confused as I'm combining two sources of credit in one payment. Does it make any difference? Would it mean I have to contact both credit companies if the supplier becomes insolvent?

bigadaj

Section 75 relates to credit agreements, so you could have a claim from both the credit card and the buy now pay later.

This means that you could claim off both or either but not twice! The liability is joint and several so you would have three rather than two options, the vendor being the other option.

grumbler

audigex wrote: »

The plan is to pay £5k on my Credit Card (0% for 24 months), of of which I'll pay off £3k. The other £5k will be on buy-now-pay-later (again, 24 months), leaving me with £5k + £2k of "pay later" between the two.
Paying it off isn't an issue...

If it's not an issue, why will you pay off £3K only?
Or, if you have £7K lump sum available in 24 months, why pay £3K earlier?

Paying it off isn't an issue, but I'm just wondering how this effects the Section 75 protection: since I'm paying on my Credit Card, am I right in saying that the Credit Card would cover the entire amount? Or alternately that the credit agreement with the kitchen company would cover the entire amount?

affects

Yes, both lenders will be liable for the full amount each.

audigex

haha, I gave up trying to remember which way round effects and affects are a good 5 years ago... like Manoeuvre. Maneuvre? MAN-wholeBunchOfVowels-vre.

As to why I'm doing it this way: perhaps I should have said that paying it off later isn't an issue. As you surmised, I have a £7k lump sum coming in (just under) 2 years. Normally I would just wait, as I don't typically buy on credit unless in an emergency, but the kitchen really needs doing before then and is fairly low risk (I could feasibly pay the remainder off in the 24 months regardless of the lump sum, and will likely do so, in addition to the fact the kitchen will add at least a large proportion of its own value to the house)

The kitchen company requires at least a 30% deposit, but will give a better discount with a higher deposit (as the buy-now-pay-later comes with a cost to them), hence why I'm looking at putting some on the credit card in addition to the cash I have available.

That's all immaterial to this, though - rest assured that I have at least three ways to cover the cost if the lump sum does not materialize (it should). You've answered the important point, though, that I'd be covered either way thanks. I'm not anticipating any issues (the supplier is well established and I accidentally saw their healthy looking sales figures, so I don't envisage them going bust), but I like to have all bases covered!

SuperHan

audigex wrote: »

haha, I gave up trying to remember which way round effects and affects are a good 5 years ago... like Manoeuvre. Maneuvre? MAN-wholeBunchOfVowels-vre.

As to why I'm doing it this way: perhaps I should have said that paying it off later isn't an issue. As you surmised, I have a £7k lump sum coming in (just under) 2 years. Normally I would just wait, as I don't typically buy on credit unless in an emergency, but the kitchen really needs doing before then and is fairly low risk (I could feasibly pay the remainder off in the 24 months regardless of the lump sum, and will likely do so, in addition to the fact the kitchen will add at least a large proportion of its own value to the house)

The kitchen company requires at least a 30% deposit, but will give a better discount with a higher deposit (as the buy-now-pay-later comes with a cost to them), hence why I'm looking at putting some on the credit card in addition to the cash I have available.

That's all immaterial to this, though - rest assured that I have at least three ways to cover the cost if the lump sum does not materialize (it should). You've answered the important point, though, that I'd be covered either way thanks. I'm not anticipating any issues (the supplier is well established and I accidentally saw their healthy looking sales figures, so I don't envisage them going bust), but I like to have all bases covered!

The point you didn't address is... Why pay the £3k off?

Stick it in an interest bearing account (you can get up to 5% on at least some of the balance), and use it to pay the minimum payments each month/the lump sum at the end. You could net an additional £240 that way (assuming you're a basic rate taxpayer)

audigex

Ah ok. I guess because I like having no debt, and I see having as little debt as possible as the next best thing. It also means I can't accidentally spend it and find myself in the position of having to find it

I do see your point, though, that probably makes more sense - pay £5k on the credit card and leave the credit card balance sat at £5k with £5k on BN-PL, and £3k earning interest.