Legal UK Services has today issued a warning to UK consumers to be aware of the T&Cs of financial services as the cost-of-living crisis grips the nation and more people turn to quick credit to relieve strain on household budgets or to purchase items they cannot immediately afford.

Rising fuel, food, and energy costs are having a massive impact on the amount of money we have in our pockets. With many people struggling to pay their bills and Christmas less than two months away, financial desperation means more people are becoming susceptible to scams and deals that aren’t right for them.

Buy Now Pay Later (BNPL) is a common credit facility that people use routinely and is perceived to be a quick fix when money is tight, or you want non-essential items. The lure of being able to buy the things we want or need now, and paying for them later, can result in taking on a debt that consumers can’t afford. A survey carried out in 2021 revealed that almost one in 10 people (9%)[2] were planning to use BNPL for part of their Christmas shopping. The same survey also revealed that out of the 43% who were resorting to borrowing to help cover Christmas in 2021, one in five said they’d be turning to BNPL to pay for at least part of the shopping. Given the current climate, it’s likely this figure will rise in 2022.

Catherine O’Brien from Legal UK Services said: “Buy Now Pay Later is an attractive option for many, whether it’s using a credit card with an interest-free period or using a service that allows for several instalments over an interest-free payback period. Over the past few months, we have seen a new trend of food stores, such as Iceland and food delivery services like Deliveroo offering this as a payment option.”

“This is an extremely worrying move in the credit industry. How did we get into a position where people in the UK are now given the option to eat and then have to pay for this several months later with interest? What is needed is a shakeup, not only of financial services for consumers but education. Until we are educated about money and credit – so we are all able to make informed, intelligent decisions – we will continue to see people trapped in a poverty cycle.”

If you are worried about your finances this winter and are considering entering into credit agreements to pay for daily living expenses, Christmas or one-off large purchases, Legal UK Services offers these top tips:

If you know you’ll have the money to make the payments, Buy Now Pay Later can be a good way of spreading things out and leaving extra funds to be utilised elsewhere rather than paying for things in one go. But the crucial point is to make sure the payments are affordable.

Make sure you know exactly when the payments will be taken and for how much. How will you cover them? If you are using Buy Now Pay Later because you don’t have the money now, will you have the money when the payment is due? If you don’t, it will become an expensive way to get credit, as the interest rate (if applicable) will rise sharply if you don’t make the payments on time.

If you are considering a Buy Now Pay Later option, do your homework first, so you know exactly what you are signing up for, and the consequences if you don’t have the money in your account when the payments are due. Don’t let yourself be swept up in the moment if you know you won’t have the money to make the payments. A missed payment could mean your credit record will be marked. This could mean you will struggle to get a mortgage or other credit in the future.

Don’t feel pressured to sign something there and then. If the salesperson is doing that, walk away. Deals that seem too good to be true and need to be taken up quickly usually are too good to be true. If they are a genuine offer, a reputable company will want you to have time to check if it is the right product or service for you that meets your individual needs.

Catherine O’Brien said’; “It is important consumers understand any type of financial product they are signing up for. But in the current climate, this is particularly true. Less scrupulous companies may try to make their products and services look more appealing, targeting those who are struggling and more likely to sign up for things with inaccurate or misleading information.

“Financial agreements can seem complicated and the temptation for some, particularly if they are desperate and need funds quickly, is to sign without reading or properly understanding how much it is going to cost you and what are the consequences if you can’t meet a payment. However, the key piece of advice here is to read everything through thoroughly. If you don’t understand something, ask what it means. Don’t feel embarrassed if you still don’t understand. Financial services and agreements are often littered with jargon. If needs be, ask someone else to read it over with you, ideally a financial adviser. They can go through the terms with you to make sure you understand everything and that the financial product meets your needs.”

For more information about financial mis-selling visit https://legalukservices.com