Dangers of BNPL

MyRealNameToo

Well to be fair thats just oddness... you've to to have a CC with them first, you then either buy it on CC and pay interest or buy it on a plan on the card for a fixed monthly fee which they say will be less than the interest the CC would charge. Would really need to see some illustrative numbers to see how they work out 

Their bar to entry therefore is higher than the likes of Klarna, also not sure if the plan uses up your CC's credit limit or not, if its a new credit agreement or under the CC's credit agreement and therefore always regulated lending. 

born_again

MyRealNameToo said:

Well to be fair thats just oddness... you've to to have a CC with them first, you then either buy it on CC and pay interest or buy it on a plan on the card for a fixed monthly fee which they say will be less than the interest the CC would charge. Would really need to see some illustrative numbers to see how they work out 

Their bar to entry therefore is higher than the likes of Klarna, also not sure if the plan uses up your CC's credit limit or not, if its a new credit agreement or under the CC's credit agreement and therefore always regulated lending. 

I would also think this has more to do with Apple than a actual HSBC product.
So would be a agreement between HSBC & AP to offer the Apple BNPL product.

https://support.apple.com/en-mide/120477

MyRealNameToo

born_again said:

MyRealNameToo said:

Well to be fair thats just oddness... you've to to have a CC with them first, you then either buy it on CC and pay interest or buy it on a plan on the card for a fixed monthly fee which they say will be less than the interest the CC would charge. Would really need to see some illustrative numbers to see how they work out 

Their bar to entry therefore is higher than the likes of Klarna, also not sure if the plan uses up your CC's credit limit or not, if its a new credit agreement or under the CC's credit agreement and therefore always regulated lending. 

I would also think this has more to do with Apple than a actual HSBC product.
So would be a agreement between HSBC & AP to offer the Apple BNPL product.

https://support.apple.com/en-mide/120477

According to your own link only Klarna and Monzo is available in the UK. I dont have an account with either but see that Klarna is offered. 

The HSBC link previously shared states you must have a HSBC CC to use it, so yes something supported via apple but doesnt appear to be open to those not already in a credit agreement with HSBC for a CC

Theleak250

OP did you actually read the article?

my point is that the ease of which credit is available via the apple pay instalments and the capacity to spend a lot of money and spread it over time at point of purchase, is more likely to result in someone being in debt. Rather than traditional credit card spending. 

Yes if you are spending on a credit card even via apple pay instalments, you owe the same money either way or maybe even less, however it will make people more likely to spend, in my opinion. If I go to buy something which is £1000 I might hold off I have to pay that back, but if I have the option to split it and only pay £100 a month it looks a lot easier, and do this a few times and before you know it, you could lose track of these repayments required and build a debt pile.

MattMattMattUK

All these lenders do is make it easier for those with low impulse control to borrow beyond their means. It has been a cycle for many decades where those people always found a way to borrow, friends and family, overdrafts, credit cards, loans, shop finance, payday loans and now BNPL or even loan sharks. For the consumer the upside of BNPL is that it carries no interest, the downside is it is unregulated and spread across many lenders who have no visibility of other BNPL lending so one can get into more debt than a traditional lender would allow. 

The majority of the population have access to BNPL, only a small proportion use it at all, even fewer use it irresponsibility. The same can be said of cars, of alcohol, of many things. The issue is not the product or service, it is the way some people choose to use it.

Chrysalis

I used to think the principle of BNPL is ok, basically its the same as other credit, if you cant manage money, dont know how to deal with problems, try to pretend its not there etc, then you can get into a mess, but if you manage it properly, have the means to pay what you owe then its fine. 

But this is until I used clearpay to pay for something thinking I would have S75, and then later learnt there is such a thing as "unregulated credit" where even the FCA dont have power to deal with these companies, details of my situation at the end of this thread.

https://forums.moneysavingexpert.com/discussion/6582819/clearpay-credit-card-company#latest

I think that unregulated credit even exists is a problem.

https://www.fca.org.uk/publications/consultation-papers/cp25-23-deferred-payment-credit-proposed-approach-regulation 

Theleak250

Klarna has now launched a credit card in the UK

https://www.klarna.com/uk/credit-card/

enthusiasticsaver

Using credit cards or BNPL should really only be done by people with good impulse control.  It is way too easy to fall into the trap of not paying it off within the deal period and then paying a fortune in interest.  DFW forum is littered with stories of people getting into debt spirals by buying now without thinking of whether they can afford it or even need these things. Consumerism where the only winners are the banks/credit card companies. 

born_again

enthusiasticsaver said:

Using credit cards or BNPL should really only be done by people with good impulse control.  It is way too easy to fall into the trap of not paying it off within the deal period and then paying a fortune in interest.  DFW forum is littered with stories of people getting into debt spirals by buying now without thinking of whether they can afford it or even need these things. Consumerism where the only winners are the banks/credit card companies. 

From the FAQHow much can I spend with the Klarna Credit Card?

How much you can spend is reassessed on a real-time basis. You can view your current available amount to spend - Available Purchase Power - anytime in the Klarna App. It can increase or decrease over time depending on your repayment history and outstanding purchases with Klarna. Your Purchase Power takes into account all your purchases with Klarna - not just the Klarna Credit Card - in order to give you more transparency and control over how much you can spend. You may reduce your limit below what we have offered you.

Theleak250

Sky News have a page about BNPL. And how it can damage your mortgage chances. 

Interesting Klarma response to this was “find another broker”

https://news.sky.com/story/money-latest-consumer-personal-finance-sky-news-pensions-mortgages-budget-13040934?postid=10449235#liveblog-body