The cost of living is rising. Inflation is at its highest rate for 30 years. And it’s hurting young women, who face historically high housing and living costs. Enter: buy now, pay later (BNPL) – a phenomenon that allows young people to buy things they can’t afford. Thirty-nine percent of R29 readers say they have used a buy now, pay later service. Is this a radical initiative to help young people manage their money and buy what they want (as providers argue) or a way of getting young people into debt by spending frivolously? Refinery29 investigates. In our series Paying For It, this week we will be hearing from the women who use BNPL services.
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Thirty-five-year-old Sharon* from London works in recruitment, earning just under £50,000 a year. She has used buy now, pay later (BNPL) to purchase large and expensive items such as furniture. She first used a BNPL scheme around a year ago, in March 2021, because she needed to buy a sofa for £300. She then used it again, to purchase another sofa which cost £2,000.
"The first sofa was from Very.com," Sharon explains. "I’d just bought my first flat and was about to move in. I needed to have cash in the bank at that time so BNPL seemed like a good way to make sure I could get the sofa I needed and not drain my bank account."
The second sofa was an expensive purchase from Sofology. Sharon really wanted it and BNPL had been helpful to her the first time around so she decided to use it again. "BNPL has actually been very useful for me because I like to keep cash in the bank and sometimes you just don’t have those kinds of funds to hand but you need to make a big purchase," she explains.
Sharon’s repayments were manageable. The first sofa cost her around £35 per month. She repaid the full amount in two months, however. She split the payment for the second sofa over six months after putting down a deposit, meaning she was left paying a couple of hundred pounds each month.
BNPL companies argue that they are offering a credit solution and Sharon agrees. "It’s all interest-free so I don’t see the harm," she continues. "As long as BNPL has no interest I think it’s a good thing but if it’s charging people interest then I am against it."
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Sharon acknowledges that BNPL is imperfect. Not least because, for some people, a change in circumstances can mean a missed payment and therefore potentially unaffordable interest.
When asked about the potential downsides of BNPL she said: "I think it’s too difficult to check on how much you have left to pay. It’s not clear. It’s not easy to amend repayment dates to make sure they align with your payday. I can see how that could catch people out."
It’s not just furniture that Sharon has bought using BNPL. "I always use Klarna to buy clothes," she says. "I’ll buy the clothes on Klarna and try them on at home. Whatever I want to keep I pay back with Klarna and whatever I don’t want to keep I return."
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My broker did tell me to slow down on using Klarna when I was applying for a mortgage.
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This way of shopping with BNPL, says Sharon, enables her to shop online as she would in real life, trying on multiple sizes and checking the fit of a piece of clothing before making a decision.
"If I use Klarna I don’t have to spend the money on something that doesn’t fit or won’t suit me," she explains. "I don’t have to sit around waiting for refunds because it is credited back to my Klarna account at no cost to me."
How often does Sharon buy multiple sizes and do a return? "At least once a month," she says. The last item she did this with was "T-shirts from Ralph Lauren". She bought two sizes and returned the one she didn’t want.
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"With BNPL I can shop as normal. I don’t have to queue for changing rooms or be in a busy shop," she adds. "I can do it all from the comfort of my own home."
As ever with BNPL, the devil is in the detail. Does Sharon worry about what might happen if she misses a payment and incurs interest as well as a hit to her credit score as a result?
"I think as long as you can pay on time BNPL is positive but I know it’s not a good thing if you keep missing payments," she says.
Sharon also thinks it is unfair that some banks discriminate against people who have used BNPL but not missed payments when they apply for a mortgage, as Refinery29 reported last year. This is because some banks consider the fact that someone has used BNPL as a sign that they can't manage their money effectively.
"It’s not right. I think the bank should request a copy of your payment schedule and see that you’ve paid on time," says Sharon. "I don’t think using BNPL should be seen as bad. My broker did tell me to slow down on using Klarna when I was applying for a mortgage."
Sharon is adamant that she won’t stop using BNPL schemes when she shops. "I think it’s better than using a credit card because you don’t get charged interest unless you miss a payment," she concludes. "In my experience this is better than more traditional forms of credit. I don’t see the problem as long as you stay on top of it."
*Name changed to protect identity