What is buy now, pay later (BNPL)?
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In short: Buy now, pay later lets you split the cost of a purchase into instalments, often interest-free over a few weeks or months. From 1 February 2026, most BNPL agreements are regulated under the Consumer Credit Act, giving you clearer information, affordability checks and access to the Financial Ombudsman if things go wrong.
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Reviewed by Kaiser Khan
BNPL products are offered at online and in-store checkouts by firms such as Klarna, Clearpay and PayPal Pay in 3. Typical structures include paying in three or four instalments over six to eight weeks, or spreading larger purchases over longer interest-free periods. The appeal is convenience and avoiding upfront cost.
From 1 February 2026, the FCA brought most short-term interest-free credit — including mainstream BNPL — under Consumer Credit Act regulation. Providers must give pre-contract information, assess affordability for new lending, treat customers fairly, and participate in dispute resolution through the Financial Ombudsman Service.
BNPL is still debt. Missing payments can lead to late fees, debt collection and harm to your credit file depending on the provider and product. Because instalments are often automatic, it is easy to stack several BNPL plans and lose track of what is due. Treat each plan as a loan with a repayment date, not 'free money'.
Regulation does not mean BNPL is always the cheapest way to pay. Compare the total cost, read what happens if you return goods or cancel orders, and check whether the provider reports to credit reference agencies. For larger or longer-term borrowing, a regulated personal loan or 0% credit card may offer clearer terms.
Primary source: gov.uk/government/news/new-rules-to-end-buy-now-pay-later-wild-west-protect-millions-of-shoppers-and-drive-growth
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