Is Buy Now, Pay Later worth it in 2025?

• What is Buy Now, Pay Later (BNPL)?
• The pros of BNPL
• The cons of BNPL
• New BNPL regulation: What’s changing?
• When might BNPL make sense?
• What are BNPL alternatives?
• Quick FAQs on BNPL

There have been recent warnings from regulators about BNPL services, resulting in industry changes. Let’s break it down so you can decide if Buy Now Pay Later borrowing is a good idea.

What is Buy Now, Pay Later (BNPL)?

BNPL lets you split payments into smaller chunks, often interest-free, over a few weeks or months. It's fast, often requires no credit checks, and is embedded into many online checkouts.

According to a 2025 survey conducted by Finder.com, 2 in 5 UK adults have used BNPL at some point. For many shoppers, it feels like a convenient, risk-free way to buy something now and pay later. But is it really risk-free?

The pros of BNPL

1. Interest-free payments: Many BNPL providers don’t charge interest as long as you pay on time. That can be a more affordable option than using a credit card.
2. Quick approval: Currently you don’t usually need a full credit check to get approved. Although regulation is changing (more on that later), BNPL services remain accessible to more people, especially those with thin or no credit history.
3. Budgeting help: If you use it responsibly, it can help smooth out cash flow for planned purchases like holidays or home upgrades.
4. Split payments: Breaking up payments into smaller, more manageable amounts means you don't need to have all the cash in your pocket that day. This can be particularly helpful for bigger purchases.

Sounds good so far—so what’s the catch?

The cons of BNPL

1. It can encourage impulse spending: BNPL makes getting what you want easier, and this can lead to overspending and impulse purchases. Even though there’s no interest fee, excessive purchases can snowball out of control, meaning you can hit a point where you cannot make payments on time.
2. Missed payments = fees: If you don’t pay on time late fees kick in, and some providers will pass the debt to collections. The Centre for Financial Capability reported that over 1 in 5 users missed one or more  BNPL payments in the second half of 2023. Not only is there the cost, but late payments can hurt your credit score and cause stress.
3. Excessive overdraft use: Automatically scheduled payments could increase the potential for your bank account to go overdrawn. In 2023, we reported that 1 in 5 UK adults go into overdraft every month. Excessive use can result in your bank removing your overdraft services. 
4. Credit checks are coming: Regulation is tightening in the UK. From 2026, BNPL providers might need to conduct credit checks and treat BNPL like other forms of regulated credit.

More on the new BNPL rules and what these may mean to you next.

New BNPL UK regulation: What’s changing?

Buy-Now, Pay-Later companies will fall under the full supervision of the Financial Conduct Authority (FCA), and the Consumer Credit Act rules will apply.

Proposed changes include:

• Affordability and credit checks before approval to ensure customers can make repayments and prevent overspending
• Clearer terms and conditions at checkout so consumers can make informed decisions and are aware of the risks
• Stronger consumer protection and rights if things go wrong or if a customer wants to return an item

These changes are designed to bring BNPL products and services in line with other consumer credit products, such as short term loans, and reduce the risk of users falling into debt. The FCA is expected to finalise rules, so these can take effect in 2026. Currently, BNPL providers must comply with FCA financial promotion rules.

When might BNPL make sense?

BNPL might be worth it if you...

• Are buying something planned and essential
• Know you can repay it, and on time
• And you are not undergoing any debt difficulties

BNPL may be best avoided if you…

• Are using it to make ends meet or buy non-essential items
• Already have trouble keeping up with bills
• Are juggling multiple BNPL payments across different providers or struggling financially

What are BNPL alternatives?

As is often the case with most financial services and borrowing, it is always worth checking out the alternatives, these include:

• Interest-free credit cards (or 0% purchase credit cards): If you qualify, these offer interest-free periods that may be longer than a BNPL repayment period. Credit cards come with consumer protections
• Saving up: Old school, but effective—avoids all fees and debt
• Budgeting apps: Tools like Monzo, Emma, and Plum can help you plan spending and save for future purchases

Quick FAQs on BNPL

Does Buy Now, Pay Later affect your credit score in the UK?

It can. Right now, many BNPL providers don’t report to credit reference agencies unless you miss a payment or default. However, with new regulations on the way, credit checks and reporting will become more common. This means your BNPL usage — including missed payments — could impact your credit score more directly.

What happens if I miss a BNPL payment?

Missing a BNPL payment can result in late fees, debt collection, and damage to your credit score — particularly as reporting becomes more widespread. It may also affect your ability to use the service again or get approved for credit in the future. Some providers now share this data with credit reference agencies, so treat BNPL like any other debt or personal loan: repay it on time, every time.

Which BNPL services are regulated in the UK?

Currently, BNPL providers are subject to FCA financial promotions rules, but not fully regulated under consumer credit laws. Full regulation is expected in 2026, when the FCA will bring BNPL into its wider oversight. This means major providers like Klarna, Clearpay, Laybuy, and PayPal Pay in 3 are not yet subject to the same rules as credit cards — but that’s changing.

In conclusion

BNPL services are useful, but these must be treated like any other credit product and debt. They’re not "free money", and starting in the coming months, they’ll come with stricter rules and more oversight, meaning your credit report and score will be affected by credit searches and late repayments.

Use BNPL with care and as a way to complement your budgeting and future plans. Take your time to understand the terms, making sure you can afford repayments. Focus only on what you really need to buy, and try not let ease or convenience cloud your judgment.