Don’t Buy Now, Regret Later

Community 4 min read

01 Dec 2023

As we eagerly anticipate the holiday season, filled with joy and festivities, the strain on budgets becomes more apparent in the face of the cost-of-living crisis. While careful savings and budgeting can ease the financial burden, some may still turn to borrowing to meet holiday expenses. 'Buy Now, Pay Later' emerges as a popular choice, especially when indulging in seasonal shopping sprees on high streets or online platforms.  

In research carried out by the Central Bank of Ireland, 43% agreed that they often spend ‘significantly more money than planned’ when using Buy Now Pay Later. This can often lead to buying more what you need along with added financial duress. 

To ensure a smooth and informed experience, here are five crucial considerations to bear in mind during this Christmas season. 

Understanding 'Buy Now, Pay Later' 

'Buy Now, Pay Later' provides a flexible method for consumers to pay for their purchases in instalments. While smaller loans up to €500 may not incur interest, it is essential to be aware of potential administration fees associated with this payment method. 

While many people consider it to be a loan, it is widely regarded as a payment method to pay for your shopping and not credit. 
 

What Falls Under 'Buy Now, Pay Later'? 

This payment option extends beyond the purchase of regular items like clothes and electronics to cover a range of products, including holiday packages and home appliances. 

1. Hidden Costs  

It is crucial to recognize that the convenience of 'Buy Now, Pay Later' is not without its costs. While smaller items may be interest-free, consumers may encounter application fees, account-keeping fees, or late payment fees. For larger purchases, such as furniture or TVs, interest charges may apply.  

The Credit Union Advantage – There are no hidden fees and charges for a credit union loan. All constructs such as your term, repayment type, repayment amount, total cost of credit etc are clearly listed on the loan agreement from Day 1. 

2. Agreement Terms 

Scrutiny of the agreement is paramount, as failure to adhere to terms and conditions can negatively impact credit ratings. 

The Credit Union Advantage – The agreement terms and conditions are fixed and done so in consultation with the member. This allows for clarity and ease of repayment for the member while not putting them under any financial duress. 

3. Regulated vs. Unregulated Providers 

Before entering into an agreement, consumers should research whether the 'Buy Now, Pay Later' provider is regulated or unregulated. Unregulated entities may employ harsher debt collection methods, and in times of financial difficulty, additional service costs might be imposed by the lender. 

The Credit Union Advantage – The Credit Union in Ireland are regulated by the Central Bank of Ireland and follow the guidelines set by them. Additionally, each credit union has a credit control team to support members in times of financial difficulties. 

4. The Pitfall of Impulsive Buying 

While the convenience of 'Buy Now, Pay Later' is undeniable, it comes with the risk of encouraging impulsive buying behaviour. Unlike credit union loans, where responsibility is shared, 'Buy Now, Pay Later' places the onus solely on the consumer. Practicing responsible consumption is not only financially beneficial but also contributes to a more sustainable lifestyle. 

The Credit Union Advantage – Credit union loan officers are Qualified Financial Advisors (QFA) who will provide you with the best and most suitable advice for your consumption. This can significantly reduce the risk of financial duress while supporting you to enjoy your purchase. 

5.  Return Policies and Considerations 

When using 'Buy Now, Pay Later,' returning items may not be as straightforward as traditional purchases. Different return dates, restrictions tied to payment completion, and complications arising from missed payments can complicate the return process. It is advisable to check the shop's return policy in advance to avoid any surprises. 

The Credit Union Advantage – When purchasing using a loan from the credit union, your returns are dealt with the seller. This eliminates any other parties or terms and conditions that my restrict or control the returns process. 

It is important to identify your options and make a rationale decision. At the credit union, we love Christmas, but we understand it can be a hard season for many. There can be never-ending to-do lists, stress and enormous costs involved. So, if you think you might need a loan (and you’re looking for the stress-free kind) – look no further than your local credit union.  

While Buy Now Pay Later is easier but riskier, a credit union loan can be an option making the festive season both enjoyable and financially sound. 

If you wish to learn more about a credit union loan, click here.