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'Buy now, pay later' debts hitting young

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Backdated interest payments are leaving young people with unexpected bills from "buy now, pay later" deals, a charity has warned. Citizens Advice said that thousands of people in their 20s who sign…
MrSpencer Avatar
2m, 15h agoPosted 2 months, 15 hours ago
Backdated interest payments are leaving young people with unexpected bills from "buy now, pay later" deals, a charity has warned.

Citizens Advice said that thousands of people in their 20s who signed up to offers were struggling with debt.

These deals allow people to delay paying for items for an agreed period of time, such as six or 12 months.

Yet failing to pay in full by an agreed date brings interest charges backdated to the start of the agreement.

Missing a payment deadline could leave people with bills amounting to twice the original price, Citizens Advice warned.

The charity said this was a persistent issue, having helped 24,000 people with 50,000 catalogue or mail order debt problems in the past year.

These people had an average debt of £1,300, with young adults aged 25 to 29 most likely to have problems with catalogue debts.

Computer bills

One shopper bought a £700 laptop from a catalogue company on a one-year interest-free deal.

Citizens Advice said he developed health problems which meant he had to give up work, and he struggled to pay back the final instalment of £150 during the interest-free period.

He was left with an interest bill that cost nearly as much as the laptop.

The charity also helped a man who bought a £600 tablet computer on a similar one-year deal. He still owed £100 at the deadline.

As a result he received an interest charge amounting to more than the cost of the tablet.

'Shock bills'

Citizens Advice said its analysis of 250 cases revealed cases of high fees, inadequate affordability checks and poor debt collection methods, such as repeated demands for repayments from debt-ridden customers.

It is calling for the financial regulator to ensure providers display potential charges clearly, and make it clear that a failure to repay will lead to backdated interest payments and additional late payment fees.

"Buy Now, Pay Later deals help people spread the costs of catalogue purchases but it is vital customers understand what they are signing up for and what will happen if they fail to repay on time," said Citizens Advice chief executive Gillian Guy.

"Clearer explanations by catalogue firms when advertising these deals will prevent people being hit with shock bills that could send them spiralling into debt."

The Financial Conduct Authority (FCA) is conducting a review into high-cost, short-term credit, including catalogue debt.

"We will look across all high-cost products to build a full picture of how these are used, whether they cause detriment and, if so, to which consumers," an FCA spokesman said.

Any proposals will be published in the summer of 2017.

http://www.bbc.co.uk/news/business-38378069
MrSpencer Avatar
2m, 15h agoPosted 2 months, 15 hours ago
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Top Comments

(3)
7 Likes
'Unexpected'? Seriously? No wonder generation snowflake doesn't stand a chance.
5 Likes
Moral of the story, don't buy things you can't afford*

*exceptions granted for assets that can be sold for largely what you paid for them if things go tits up, e.g. property.
5 Likes
Another reason why financial management needs to be taught in schools. We have a generation of adults who for whatever reason are seemingly less financially savvy than previous generations who frankly have learned how to prey on this especially well.

BNPL can be a great way to essentially get a 0% loan but my god you have to pay it off on time or else. If anyone is considering using these schemes make 1000% sure that they can be paid off in time, no matter what and have an emergency funding line (Which isn't a PayDay loan for crying out loud, if you considered this, then never take one of these deals for your own sake!) available in case. Whatever you do, never let these deals expire as they will stiff you.

Part of the business model of these deals is hoping people fail to pay in the time, giving the companies essentially carte blanche to hit you hard and it can lead to severe debt trouble. These companies need to be more up front about how much failing to pay will cost too as I think lots of people have no idea what they get themselves into when committing to them.

Edited By: Stop It on Dec 21, 2016 09:04: Spelling

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1 Like #1
Saw this, reminded me of Bennett's in the 90s with their 'buy now pay in a year and a day'
Bit of a scam in all honesty and ethically crosses the line.
Consumers need to wise up to this practice. I think it will disproportionately affect the more vulnerable in society.
5 Likes #2
Moral of the story, don't buy things you can't afford*

*exceptions granted for assets that can be sold for largely what you paid for them if things go tits up, e.g. property.
#3
I had this problem with Very. Joined as an 18 year old, paid approx. £30pm after an agreement that my account would be frozen and no interest accrued while that £30 was being paid (because I'd got behind with payments due to not working while at uni). However, they added interest all the same (plus £15 a letter to tell me I was overdue each fortnight) and now my £300ish debt is over £1000. I don't know when I'll be able to pay it, if ever. Really screwed my credit rating up. :(
5 Likes #4
Another reason why financial management needs to be taught in schools. We have a generation of adults who for whatever reason are seemingly less financially savvy than previous generations who frankly have learned how to prey on this especially well.

BNPL can be a great way to essentially get a 0% loan but my god you have to pay it off on time or else. If anyone is considering using these schemes make 1000% sure that they can be paid off in time, no matter what and have an emergency funding line (Which isn't a PayDay loan for crying out loud, if you considered this, then never take one of these deals for your own sake!) available in case. Whatever you do, never let these deals expire as they will stiff you.

Part of the business model of these deals is hoping people fail to pay in the time, giving the companies essentially carte blanche to hit you hard and it can lead to severe debt trouble. These companies need to be more up front about how much failing to pay will cost too as I think lots of people have no idea what they get themselves into when committing to them.

Edited By: Stop It on Dec 21, 2016 09:04: Spelling
3 Likes #5
EmmerrLouise
I had this problem with Very. Joined as an 18 year old, paid approx. £30pm after an agreement that my account would be frozen and no interest accrued while that £30 was being paid (because I'd got behind with payments due to not working while at uni). However, they added interest all the same (plus £15 a letter to tell me I was overdue each fortnight) and now my £300ish debt is over £1000. I don't know when I'll be able to pay it, if ever. Really screwed my credit rating up. :(
Having your credit rating screwed up by this is probably a good thing for you at the moment. It also justifies it to be honest. I have debt as well so not preaching to you.
#6
i was a manager at HFC bank before the last recession we did all the credit for dixons group, this was a major problem for customers there were lots of customers we moved to 30% apr revolving credit the day before interest was due to try and help them..

I do think this is a part of the "I Want" culture we have inherited from the US..

I personally was horrified when i saw dixons offering this finance again... so you are aware WONGA are moving into this market as we get wise to the pay day loans..
3 Likes #7
That's why i'm glad my mam taught me to save up at least half before buying anything. By habit I always save the full amount. Buying something on credit just sounds like a disaster to me, obviously it can be done without problem, but lots of people are careless.
1 Like #8
I think it is down to self control. If you divide the total amount of your item by 12 months and pay this monthly then you should not have a problem. It becomes an issue when you wait until the 11 month and realise hang on i do not have the money, and then Christmas comes along and the rest is history.
7 Likes #9
'Unexpected'? Seriously? No wonder generation snowflake doesn't stand a chance.
2 Likes #10
Scorpion
Moral of the story, don't buy things you can't afford*

*exceptions granted for assets that can be sold for largely what you paid for them if things go tits up, e.g. property.


​And there goes the point soaring over your head
1 Like #11
has debt not hit (nearly) every youngster, they start off somewhere, weather it be bank card, loan, buy now pay later

i had finance on my first car at 18yrs old, im now 58yrs old

so this is just "news" for something to write, and some expert making a lot of money from it
4 Likes #12
Rich44
Scorpion
Moral of the story, don't buy things you can't afford*

*exceptions granted for assets that can be sold for largely what you paid for them if things go tits up, e.g. property.


​And there goes the point soaring over your head


​I think the poster pretty much nailed the point on the head if you can't afford it now don't buy it!! a lot of these debts are people on low incomes wanting the latest 4k tvs or ugg boots or £600 coats the latest iPhone etc etc
#13
I have always used this type of purchasing if I did not have cash BUT I was disciplined enough to only get one BNPL deal, I would always pay the monthly amount that I worked out to ensure it was completed before the BPNL deal ended and interest was added. Luckily for me, I have never had a problem.
2 Likes #14
It's like those money loaning companies as well. 1450% Apr etc.

There should be a law on how much Apr can be charged for companies in the UK. They feed on the poor and desperate in hope something goes wrong and get back a lot more than the service was worth.

I got a very account and have been interested in the bnpl but every time I consider it I get a worried thought what happens if I don't finish of my bill in time and decide to go take 3 option instead. At least I know I can cover the purchase in one go, or just save the money over 3 months.
#15
I'm looking forward to 'buy now, let your kids pay'. X)
1 Like #16
This is my son and his GF, despite them pulling in the best part of £4k per month, they constantly complain of having no money, and not being able to afford various things.

I got this from him last week, about a £350 item he does actually NEED, then yesterday a brand new car was announced (on finance of course).
#17
jaydeeuk1
'Unexpected'? Seriously?

Indeed. Idiots!
1 Like #18
SidSnot
I'm looking forward to 'buy now, let your kids pay'. X)

This is what our elected governments have always done. 'buy now, let your kids pay'.

Why should the citizens not follow the example that successive governments have always set?

Our National debt has been climbing at record levels especially over the last 8 years with no signs of abating. This includes very minimum spend on our infrastructure or our long term investments needs. While we must worry about the few hundred pounds owed by the young (as well as not so young), we should be mindful of the thousands paid by UK tax payers due to governmental interests payments on loans taken out by our parents generation.

Our National Debt is approaching 90%. We, as well as the next few generations are shackled into economic and hence political slavery. Successive governments have not implemented policies that are in our long term interest but what is most likely to get them re-elected.

Here's hoping we can leave the state of affairs to our next generation in a better state than what we inherited.

In the mean time, Seasonal Greeting and a Happy New Year!

Edited By: mubashar on Dec 21, 2016 12:00
3 Likes #19
It is a problem, I look at a few of my other half's friends, they have Mini's on PCP's, loans for mobile phones plus 24 month service contracts, loans for 'that trip' to Thailand and then credit cards to pay for clothes for nights out, even paying for drinks/food on a night out with a credit card. Then they moan they're stuck renting/living at home and can't buy a house because the deposit required is so large and blame others....

Nobody wants to look a few years in to the future, they want it now or in a few days, strangely though they don't mind paying it off for years.

Financial responsibility should be taught in schools.



Edited By: super_leeds_86 on Dec 21, 2016 12:01
1 Like #20
This does not restricts itself to the young. My OH have friends who are old enough to know better. Husband and wife with two kids. Live in a million pound property and between them they earn in excess of £80K, even though the wife only works 3 days a week.

But guess what? Owes me OH £10K and paying £250 a month back over 3 years. They had to borrow money from her mum to replace a boiler as they had no cash. Had to borrow £150 from my OH to take their kids out for Christmas.

WTF oO
#21
Really need education on this in school. Personally I learnt the hard way by living in poverty for a year following university. Could have gone a lot worse than it did. Since then I learnt to make money work on my side rather than against me, now my mortgage is the only money I owe anybody. It's quite simple, so don't understand why it is not taught in school as a lot of families from my experience don't have open conversations about finance.
#22
mutley1
This does not restricts itself to the young. My OH have friends who are old enough to know better. Husband and wife with two kids. Live in a million pound property and between them they earn in excess of £80K, even though the wife only works 3 days a week.

But guess what? Owes me OH £10K and paying £250 a month back over 3 years. They had to borrow money from her mum to replace a boiler as they had no cash. Had to borrow £150 from my OH to take their kids out for Christmas.

WTF oO


​ time to get new friends? or they'll be "borrowing" again in the future? lol
#23
It's not rocket science, you just need to read the terms and conditions it's been happening for the last thirty years at least.
#24
Credit crunch caused by too many people borrowing too much money that they couldn't afford to repay.
Enough people default and the house of cards collapses.
Interest rates plummet and stay at record lows to encourage spending out of the problem, but in doing so encourage an entire generation that borrowing money is almost free, and so set that generation up to fail in exactly the same way that caused the current problems...

Nothing wrong with interest free periods, but ALWAYS READ THE SMALL PRINT. Set aside the money either at the start if you can, or monthly if you can't, so when the period comes to an end you can pay it all off and have benefitted from it.
#25
STRICKIBHOY
mutley1
This does not restricts itself to the young. My OH have friends who are old enough to know better. Husband and wife with two kids. Live in a million pound property and between them they earn in excess of £80K, even though the wife only works 3 days a week.
But guess what? Owes me OH £10K and paying £250 a month back over 3 years. They had to borrow money from her mum to replace a boiler as they had no cash. Had to borrow £150 from my OH to take their kids out for Christmas.
WTF oO
​ time to get new friends? or they'll be "borrowing" again in the future? lol

My OH lends money to friends all the time. I never do as this is one sure way to end a friendship and i dont have many friends as it is, i dont to lose any :)

I told my OH not to lend money to their friends but they wont listen and as it is their money, i can only express my discomfort.
#26
As the Queen song says"I want it all & I want it now".
Great song but totally impractical in real life.
You do appreciate even small treats in life when you save & budget for them & there are no repercussions.
#27
landros1
As the Queen song says"I want it all & I want it now".

Sounds like a great advert for mastercard and visa to use :)
#28
mutley1
landros1
As the Queen song says"I want it all & I want it now".
Sounds like a great advert for mastercard and visa to use :)

True, but Living life on "credit" is living on borrowed time (& money).
#29
landros1
mutley1
landros1
As the Queen song says"I want it all & I want it now".
Sounds like a great advert for mastercard and visa to use :)
True, but Living life on "credit" is living on borrowed time (& money).

My OH have lots of friends who are grown up adults that should know better and they still get into debt. There was a friend who had debts of about 10k and he told my OH one day in proud announcement that he had solved all his financial problems as he has transferred all his debts onto his mastercard which he had just taken out.

Wut oO
#30
mutley1
landros1
mutley1
landros1
As the Queen song says"I want it all & I want it now".
Sounds like a great advert for mastercard and visa to use :)
True, but Living life on "credit" is living on borrowed time (& money).
My OH have lots of friends who are grown up adults that should know better and they still get into debt. There was a friend who had debts of about 10k and he told my OH one day in proud announcement that he had solved all his financial problems as he has transferred all his debts onto his mastercard which he had just taken out.
Wut oO

Escalating debt is often caused by having desires bigger than their bank balance.
I have little sympathy for anyone who deliberately lives beyond their means.
1 Like #31
mutley1
landros1
mutley1
landros1
As the Queen song says"I want it all & I want it now".
Sounds like a great advert for mastercard and visa to use :)
True, but Living life on "credit" is living on borrowed time (& money).
My OH have lots of friends who are grown up adults that should know better and they still get into debt. There was a friend who had debts of about 10k and he told my OH one day in proud announcement that he had solved all his financial problems as he has transferred all his debts onto his mastercard which he had just taken out.
Wut oO
The problem is people do this but do not cut up the old cards and run them back up again . It's a mug's game . If you can't afford it or you don't need it, don't buy it. I used to work in banking and the worst I saw was a warehouse worker on £21k pa who had run up unsecured debts of £346000.
1 Like #32
When I was younger I got myself £6000 in debt, car finance, credit at curry's for a pc etc. I then took a bank loan for £6000 so I could pay them debts of and just owe my bank, was costing me about £170 a month which was l lot then as I only earned £150 a week, it felt like a noose around my neck. Luckily around the same time (2003) I purchased a house for £29,000 a year later I sold the house for £39,000 and used the money to pay of the debt. The remaining few thousand I used to move somewhere more rural to get out of the rat race, never again would I get myself in debt, if I can not afford it I will not buy it, and I certainly would never buy a car I could not afford again. Now I save for something I really want and feel so much better for it, and because I have no debts to pay I always have money on the hip. May not be a lot but if my washing machine broke for example I could buy one cash tomorrow.
2 Likes #33
Just because I'm seeing some commenters suggest it's about 'living beyond your means' and the 'I want' culture, my fridge freezer broke and I just didn't have the money to replace it, so one for £300 via Very seemed the best option at the time. I let two months go (my bank cancelled the wrong direct debit and I simply didn't notice the £30 wasn't going to Very but erroneously to my phone provider) and they've amassed £600+ in interest and letters on my account, despite agreeing they'd freeze the account while I made the £30 minimum monthly payment. I shouldn't have got it on credit, but I didn't have many options and could've paid for it had they not charged so much in interest and fees.
#34
landros1
mutley1
landros1
mutley1
landros1
As the Queen song says"I want it all & I want it now".
Sounds like a great advert for mastercard and visa to use :)
True, but Living life on "credit" is living on borrowed time (& money).
My OH have lots of friends who are grown up adults that should know better and they still get into debt. There was a friend who had debts of about 10k and he told my OH one day in proud announcement that he had solved all his financial problems as he has transferred all his debts onto his mastercard which he had just taken out.
Wut oO
Escalating debt is often caused by having desires bigger than their bank balance.
I have little sympathy for anyone who deliberately lives beyond their means.

We were at a friends having dinner and their friend told us that they cant afford to buy a big posh house to live in so they have rented a similar one instead because they can afford the rent and they did not want to compromise on their accomodation.

This means they will never own a property but they can always live somewhere nice. Neither me nor me OH could believe what we were hearing. They were a couple with a 7 year old boy.
#35
EmmerrLouise
Just because I'm seeing some commenters suggest it's about 'living beyond your means' and the 'I want' culture, my fridge freezer broke and I just didn't have the money to replace it, so one for £300 via Very seemed the best option at the time. I let two months go (my bank cancelled the wrong direct debit and I simply didn't notice the £30 wasn't going to Very but erroneously to my phone provider) and they've amassed £600+ in interest and letters on my account, despite agreeing they'd freeze the account while I made the £30 minimum monthly payment. I shouldn't have got it on credit, but I didn't have many options and could've paid for it had they not charged so much in interest and fees.
Hope you get it sorted out and they waive the fees
#36
psychobitchfromhell
EmmerrLouise
Just because I'm seeing some commenters suggest it's about 'living beyond your means' and the 'I want' culture, my fridge freezer broke and I just didn't have the money to replace it, so one for £300 via Very seemed the best option at the time. I let two months go (my bank cancelled the wrong direct debit and I simply didn't notice the £30 wasn't going to Very but erroneously to my phone provider) and they've amassed £600+ in interest and letters on my account, despite agreeing they'd freeze the account while I made the £30 minimum monthly payment. I shouldn't have got it on credit, but I didn't have many options and could've paid for it had they not charged so much in interest and fees.
Hope you get it sorted out and they waive the fees


Thanks - no one to blame but myself for not seeing the error when the first payment wasn't made (ironically they weren't so quick to send letters about that...!), but you live and learn!
#37
EmmerrLouise
psychobitchfromhell
EmmerrLouise
Just because I'm seeing some commenters suggest it's about 'living beyond your means' and the 'I want' culture, my fridge freezer broke and I just didn't have the money to replace it, so one for £300 via Very seemed the best option at the time. I let two months go (my bank cancelled the wrong direct debit and I simply didn't notice the £30 wasn't going to Very but erroneously to my phone provider) and they've amassed £600+ in interest and letters on my account, despite agreeing they'd freeze the account while I made the £30 minimum monthly payment. I shouldn't have got it on credit, but I didn't have many options and could've paid for it had they not charged so much in interest and fees.
Hope you get it sorted out and they waive the fees
Thanks - no one to blame but myself for not seeing the error when the first payment wasn't made (ironically they weren't so quick to send letters about that...!), but you live and learn!
Such a wounder when you are on a tight budget
2 Likes #38
this is a perfect thread for the "I am way better than you and I am superior to you" members it must feel like Christmas has come early
1 Like #39
EmmerrLouise
Just because I'm seeing some commenters suggest it's about 'living beyond your means' and the 'I want' culture, my fridge freezer broke and I just didn't have the money to replace it, so one for £300 via Very seemed the best option at the time. I let two months go (my bank cancelled the wrong direct debit and I simply didn't notice the £30 wasn't going to Very but erroneously to my phone provider) and they've amassed £600+ in interest and letters on my account, despite agreeing they'd freeze the account while I made the £30 minimum monthly payment. I shouldn't have got it on credit, but I didn't have many options and could've paid for it had they not charged so much in interest and fees.
Your bank should be liable for costs you've accrued as a result of their error. Speak to them about it.

See here: http://www.financial-ombudsman.org.uk/publications/technical_notes/distress-and-inconvenience.htm
#40
mutley1
landros1
mutley1
landros1
mutley1
landros1
As the Queen song says"I want it all & I want it now".
Sounds like a great advert for mastercard and visa to use :)
True, but Living life on "credit" is living on borrowed time (& money).
My OH have lots of friends who are grown up adults that should know better and they still get into debt. There was a friend who had debts of about 10k and he told my OH one day in proud announcement that he had solved all his financial problems as he has transferred all his debts onto his mastercard which he had just taken out.
Wut oO
Escalating debt is often caused by having desires bigger than their bank balance.
I have little sympathy for anyone who deliberately lives beyond their means.
We were at a friends having dinner and their friend told us that they cant afford to buy a big posh house to live in so they have rented a similar one instead because they can afford the rent and they did not want to compromise on their accomodation.
This means they will never own a property but they can always live somewhere nice. Neither me nor me OH could believe what we were hearing. They were a couple with a 7 year old boy.

By coincidence I know a young couple with 2 children who are renting out a 3 bed house that they brought (with a mortgage) many years ago and they live in a posh 5 bed rented house costing double the rent that they are getting for their own place.

Their logic escapes me!

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