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Are ‘buy now pay later’ schemes always a bad idea?

‘Buy now, pay later’ is a time-honoured tradition allowing you to buy items you need or want now, and pay for them either in full or on a payment plan later on.

A lot of people find they are in fact an easy way to get up to their ears in debt. So are buy now, pay later always a bad idea, or can they be a valid way of purchasing things you were going to buy anyway?

A credit cardThe answer, as with all financial shortcuts, is that moderation is key. If you have the slightest suspicion that you might go overboard and end up with payments you can’t make, then don’t put temptation in your own path. Don’t get the account, don’t buy the item, just don’t put yourself in that situation. Having credit is great, but if you overuse it soon turns into a curse rather than a salvation.

If you decide to go for a buy now pay later scheme, then keep a very close eye out. One credit account is plenty; choose wisely and, if you need multiple types of items, choose a shop that sells a variety of things like Littlewoods or Very.co.uk. These two also have the advantage of offering weekly payments with 0% interest provided you repay the debt within the agreed-upon term.

Keep careful track of your monthly or weekly repayments. For this reason, it is almost always best to keep to a singleA living room buy now pay later account. Don’t go over what you can afford for any reason, and make sure you keep a decent-sized cushion in any case. Unexpected expenditures come up all the time and can throw a spanner in the works.

In that same vein, don’t consider buying on credit to be the equivalent of a savings account. They may seem to amount to the same, but nothing could be further from the truth; you are bound to your credit in a way that you are not bound to items purchased through savings. Additionally, savings provide a cushion in case of an unexpected monetary emergency that can’t be beaten.

That said, credit accounts can be the ideal solution for people with no, or poor credit. Approved quickly, you can use the credit account to build good credit for yourself by making regular repayments, or even early ones. Making a small purchase each month and repaying it in full after you receive the bill can help you rebuild your credit, or establish credit where previously you had none.

Furthermore, when you find yourself needing a big-ticket item in a hurry – for example, if a large piece of furniture is ruined by accident – you may find this the perfect solution. Again, it all comes down to moderation and not biting off more than you can chew.

All in all, buying things on credit can be a mixed bag. But if you can control your spending and know where your limits lie and how to stick to them, it can be the perfect solution for a host of problems.

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