Buy Now, Pay Later Schemes - A Blessing and A Curse?

In the age of rapidly evolving financial technologies, Buy Now, Pay Later (BNPL) services have emerged as a game changer, offering what feels like a financial cushion. But, is BNPL a savvy financial tool or a slippery slope to debt?

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Managing your finances can be a daunting task, and university students often face a financial tightrope from balancing tuition fees, living expenses and keeping up with a social life. With all these expenses to consider, traditional payment methods may not always align with a student’s cash flow.

In the age of rapidly evolving financial technologies, Buy Now, Pay Later (BNPL) services have emerged as a game changer, offering what feels like a financial cushion. These services offer flexibility of payments which aligns seamlessly with the irregular income streams of part-time jobs, loans, and personal family allowances.

The Rise of Buy Now, Pay Later

If you’ve been on any major online shopping platform, you’ll have seen Buy Now, Pay Later integrated as a payment option. These services have become increasingly popular in recent years, offering consumers an alternative payment method.

Buy Now, Pay Later services are a form of short-term financing, which allows consumers to make purchases and spread the cost over a series of instalments, often with little to no interest. Your payment can be spread over 30 days, or you can split it into three instalments, depending on the payment schedule of your chosen BNPL service.

The appeal of BNPL services lies in the promise of deferred payments. Breaking up big payments into smaller chunks can also make them seem less daunting and offer the option of buying something without needing to wait until payday or the next Student Loan instalment.

A savvy financial tool or a slippery slope to debt?

Let’s delve into the BNPL services and explore how students can navigate these services wisely.


Unlike traditional credit cards or loans, BNPL often requires minimal or no credit history, making it easier for students to access funds when needed. It provides a convenient and accessible means to purchase items without immediate payment, which could help with tight budgets or unexpected expenses.

Budget-Friendly Flexibility

If you’re waiting for financial aid, payday or other loans to come in, BNPL might help manage things in short-term financial gaps. By offering a means to spread out payments over time, you can ensure that expenses are covered without draining your savings.


One of the main draws of BNPL is that they often offer interest-free instalment plans if you pay off your purchases within the designated timeframe, which can be appealing for those looking for short-term financial solutions without the long-term burden of interest payments.

Danger, Danger, Impulse Spending Ahead!

Students who are already navigating the challenges of budgeting may find themselves tempted down a slippery slope to impulse buying. The allure of instant gratification can foster a mindset of impulsive spending, as you prioritise immediate wants over long-term financial goals. With the ability to defer payments, you may be inclined to make impulse purchases or buy items you don’t necessarily need.

Ever-Growing Debt

Missed payments can spell trouble faster than you can say ‘student loans’. While these services offer interest-free periods, missed or late payments can result in late fees, which might result in additional debt. For students already burdened with student loans and other financial obligations, this can exacerbate your financial strain and lead to long-term consequences. The normalisation of debt through BNPL services can desensitise students to the consequences of borrowing money. The mindset of “buy now, pay later” can foster a culture of consumerism, where the focus shifts from needs to wants, further feeding unsustainable spending habits.

Future Financial Fallout

While there are short-term advantages, it could have long-term implications. BNPL services don’t perform a ‘hard’ credit check, but if you have missed payments or defaults, you risk damaging your credit history. This could hinder your ability to access loans, mortgages, or other financial products in the future.

Buy Now Pay Later services are neither inherently ‘bad’ nor ‘inherently’ good. It’s about how you use them as to whether they’re good or bad. They might provide temporary relief for students facing financial challenges, however, they should be approached with caution and used wisely. It’s essential to weigh the short-term benefits against the long-term consequences and prioritise responsible financial habits.

If you use BNPL services or are considering using them in the future, here are some tips.

  • Set your own reminders. Most apps will notify you a few days before charging the amount to your account but prepare the payment in your calendar to keep track of your expenses.
  • Budget. Students should create a budget to track their income and expenses, ensuring that they can afford BNPL purchases without compromising essential expenses like rent, groceries, and utilities. Evaluate your financial situation and make purchases that you can afford to repay within the agreed-upon timeframe. Even if you can spread your costs via BNPL, you’ll need the money to repay eventually, even if that’s not in full at the point of purchase.
  • Only buy one thing at a time and limit your usage so that you can keep better track of what you’ll need to pay back and having lots of BNPL agreements can start to build up. If you can wait to buy something in full without straining your budget, it’ll be all the sweeter when you get it!
  • Read the fine print! We’re all guilty of skimming the terms and conditions but it’s important to review the T&Cs of BNPL services to understand their repayment schedule, potential fees and penalties.

Remember, financial tools are just that – tools. It’s up to us to strike a balance between convenience and responsibility is key, ensuring that these services serve as stepping stones towards financial independence rather than stumbling blocks.

Seek support if you’re struggling with financial management or budgeting. The Financial Wellbeing team can assist you with financial difficulties you may experience while you're a student at Royal Holloway. And, don't forget that our Advice Centre and the University's Financial Wellbeing team have come together to bring you Student Money Week from 11-15 March.

Further Support

Our Advice Centre is a free, independent, and confidential service for all students here at Royal Holloway. Our friendly, experienced, and professional staff will provide a listening ear and offer general and specialist advice. We’re here to support you with a whole range of issues, big and small, and if we’re not the best people to help you with a particular issue, we’ll point you in the right direction.

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