What is buy now pay later?
Before choosing a BNPL option, you should understand how it works and what to consider.
What happens if you don’t repay BNPL?
Buy now pay later (BNPL) can help you spread the cost of a purchase, often interest-free, but it’s still a form of borrowing.
How does BNPL work?
A BNPL agreement means you can shop for items now and pay later.
There are generally 3 ways to pay:
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Deferred paymentThere’s usually an interest-free period between 14 and 30 days. If you fail to pay on time, it can become expensive due to late payment fees.
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Pay in instalments.You repay what you own over several months in smaller amounts. Missing payments can lead to late payment fees.
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Pay on finance
This works like a loan and a hard credit check will be done.
BNPL can seem like a cheap way to borrow, but it might also encourage you to spend money when you might not otherwise have done.
Before signing up to BNPL, ask yourself these 4 questions:
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Would I have bought this item if BNPL wasn't an option?
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Do I have enough money to make future payments?
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Is there a more cost-effective way to borrow, including using a limit or facility I already have?
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How many BNPL agreements do I already have?
When considering BNPL, check budgeting apps to see if you can afford the payments or use our online budget planner. If you have the HSBC UK Mobile Banking app, our Balance forecast feature shows how much you could have left each month once scheduled standing orders and Direct Debits are taken into account.
Read the BNPL terms and conditions carefully to understand any late payment fees you may need to pay.
It’s also a good idea to research different ways of borrowing money, such as 0% credit cards or overdrafts. You may already have a credit card that offers instalment plans on new spending – without the need for a new loan facility or credit check.
Benefits of BNPL
BNPL can be a useful way to spread the cost of a purchase over a few weeks or months. If you were already planning to make the purchase, it helps break down the cost into more manageable instalments.
It’s also interest-free, so if you’re able to manage it well and you never miss a payment, it can be a free way to borrow money.
Things to be aware of
Any remaining instalments are automatically taken from your account at set dates. Missed payments can lead to:
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Late payment fees
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Going over your overdraft limit
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Damage to your credit score
You might not always remember a purchase made 2 or 3 months ago. You should receive reminders, but it’s a good idea to note down when your payments are due. This will help you remember. It also helps make sure you have enough money to pay on time. Otherwise, you risk having to pay a late fee.
What protection is there?
In the UK, BNPL products are not currently regulated. However, from 15 July 2026 the sector will come under the Financial Conduct Authority’s regulation. BNPL will be subject to the Consumer Duty and consumers will benefit from:
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Clear information about their agreement
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Affordability checks to ensure the loan is affordable
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Support when needed if a customer is in financial difficulty
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Complaints and compensation if something goes wrong
Please note that any BNPL agreements taken out before 15 July 2026 will remain unregulated. If firms do not comply with the new rules, they can continue to service agreements taken out before 15 July but will not be allowed to create any new loan agreements.
What happens if you don't repay BNPL?
If you’re unable to repay what you’ve borrowed, you’ll owe the BNPL company and may be charged a fee, interest or both, depending on the BNPL contract.
If you think you’re going to miss a payment, speak to your BNPL provider before the payment is due as they may be able to help.
Does BNPL affect your credit score?
Details of any short-term BNPL transactions may be included on your credit report. It’s the same sort of information that’s listed by other lenders. If you miss a payment, it could affect your credit score.
Explore: How to check your credit report
Avoid borrowing more than you can afford
People often take less care signing up for BNPL than they do when applying for a credit card or loan.
Most purchases are for small items. But if you’re not careful, you might end up with multiple payments you struggle to afford unless you’ve budgeted properly.
If you sign up for a BNPL agreement, treat it like any other debt and never borrow more than you can afford to pay back.
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This article was last updated: 26/06/2026, 05:15
