Watchdog warns against dangers of ‘buy now, pay later’ Christmas deals that leave consumers crushed by debt

Consumers have been warned they risk starting the new year snowed under with debt if they sign up to “buy now, pay later” schemes. Spending watchdogs, including the State’s Money Advice and Budgeting Service (Mabs), said consumers should be wary of so-called BNPL arrangements, which have become commonplace in Ireland over the past year. Under the deals, which are a legitimate form of credit and are interest free, shoppers are given the option to pay for goods in instalments.

However, debt advisers have urged householders — particularly those on low incomes — to steer clear of such deals in the last days before Christmas. BNPL schemes can encourage people to spend more than they have They said they were concerned shoppers are availing of “an instant form of credit”, which encourages them to spend money they don’t have and which carries the risk of additional fees being charged in the event of a missed or late instalment payment. Mabs said it is worried it could lead to even more post-Christmas financial stress for its clients, many of whom are already battling rent and utility arrears and struggling to afford the weekly shopping.



Michael Laffey, spokesman for Mabs, said: “We have a big concern over the increased presence of BNPL schemes in Ireland. For a lot of people these are very attractive arrangements and give easy access to credit. “But they can encourage people to spend more than they have.

“For example, you’d be more likely to buy an expensive pair of runners, for example ones that cost €200, if you could split the payment over three instalments rather than buying them outright. “Before you know it you could have signed up to five, six or seven of these schemes for goods that you wouldn’t have purchased had you had to pay the whole price on the spot. “If you don’t meet those instalment payments, you’ll end up being penalised and paying even more for the product.

Mabs expects that demand for its services will peak in mid-January “And if you’re already struggling with debt, it’s only going to add to your problems, because the direct debit instalment will be swept out of your account leaving you even less money to cover things like rent and utility bills.” Laffey added: “I would advise people on low incomes to be very wary of signing up to these arrangements, and if possible not to use the schemes as a way of funding their Christmas.” According to the latest figures from the service, around 15,000 clients were seen in person by its debt advisers in the first 11 months of this year.

A further 22,500 accessed the state body’s helpline during this period. Mabs expects that demand for its services will peak in mid-January which is when the Christmas moratorium on disconnections comes to an end, and utility bills start arriving in the post. As many as one in five people believe they will get into debt to pay for Christmas, with many borrowing over €600, according to recent figures from the Competition and Consumer Protection Commission.

For more information about Mabs, check out www.mabs.ie, or email helpline@mabs.

ie. The Mabs helpline number is 0818-072000, and runs from 9am to 8pm, Mondays to Fridays..