Monzo entering the BNPL space.
Are they too late or is this the move we were all waiting for?
Monzo entering the BNPL space.
Personally i how they avoid this. BNPL isn’t good for your credit score and companies that offer it have bad reputations.
Save up instead. It will take the same amount of months and you will enjoy what you bought more because of the work you put into it
I’m not sure that’s true. Xbox all access is financed under one of these, and it had zero impact on my credit score.
I paid it all off soon after though. Only purchased it that way, because it was a bit cheaper than buying the console and gamepass outright over the course of two years.
BNPL has been around for ages. The only thing that has change is the consumer behavior.
Back when I was a student I bought my first laptop with BNPL from the bank because I couldn’t afford it to pay the lump sum immediately.
I get the fact that nowadays, youngsters are using for ASOS and others. But that’s not a BNPL issue It is a consumer behavior and educational issue.
How do these things show on your credit file? Are they just like normal loan agreements, or can lenders see that it’s a BNPL three month thing?
And if someone uses it a lot, how easy is it to keep track of? Is there an app that lists all the agreements you have with Klarna, let’s say, or do you just have to keep track of each monthly repayment you have, which is a disaster waiting to happen
I understand if you’re paying 1473% interest but lots of them are interest free.
I’m a big user of Klarna, find it easier to manage money using then, and there is a really simple dashboard within the app to see what your situation is at the time.
Sensible move from Monzo to go here
Sadly, taking credit is generally good for your ‘credit score’.
Not that it matters because your credit score doesn’t tell you a lot about what you can or can’t borrow in different circumstances
Are they? Have I missed something?
Edit: article here - Monzo wades into booming buy now, pay later market
It’s all interest free until you end up with loads of them and you over run yourself and your take home pay has gone. Pay for things with your own money is what I have always been brought up to believe and still do now.
Good question! Only a soft search appeared on mine from Klarna. Nothing beyond that.
Yup, Klarna has an app for this. PayPal credit list all of these at the top of the PayPal credit page. How long is left until the interest free period ends, and how much is left to pay on them.
Then don’t do that then
I use them all the time, it’s just easier
How are you going to buy a house? Or expensive car?
Mortgages and Loans are not BNPL to be fair. And you can only have so many of them. They are limited edition borrowing.
It’s a matter of perspective I guess. The reason I don’t use them is they are there - like lots of things - to encourage you to buy more things overall. And they tend to work well on that.
I know my own behaviour to know that if I bought things on finance I would buy more stuff, so I don’t do it. People can make their own judgement, I guess, but everyone should have their eyes open in that ‘free credit’ often has a cost.
I suspect the credit pots are leaking. @Dan5 was this you communicating via emoji semaphore with the Standard?
I understand why people would use them, but I generally try to refrain from it as it’s easier/better for my cash flow to pay on a credit card and have the money go out in one go.
Is this the new credit pot thing we’re expecting or something else?
In general they don’t report to the credit bureau. This is one of the things that came out of the Woolard Review from the FCA.
They’re going to need to start reporting in the near future.
Interesting… so at the moment there’s no hit until people fail to pay. I’d be interested to see how the reporting will work – well they add a hard search + loan for each and every item, or will they add one credit line like a credit card would and then vary the balance of that… do you know any more about this?
And, theoretically, if Monzo were working on such a thing, in the form of a hypothetical credit pot that may or may not launch next week, how would that be implemented, in theory?
I don’t see a massive difference between them and a credit card, which is designed to essentially be “here, buy this now and pay us back later”.
With some tweaks in regulation they can provide a way for people to get medium priced goods that they might otherwise have had to save up for over 2/3 months.
They aren’t designed for constant shopping sprees and buying more than you can reasonably afford over time.
I’ve used a few, and only ever one item at a time. Could I have saved up over 3 months for my Nintendo? Sure. Was I fine with paying for it interest free over 3 months so I could have it now and not pay any extra? Why not!