Should You Use Buy Now, Pay Later for Christmas Gifts? The Pros and Cons

The festive season is upon us, and for many, it’s a time of joy, celebration—and significant expense. With Christmas shopping lists growing longer, Buy Now, Pay Later (BNPL) services like Klarna, Clearpay, and Laybuy have become increasingly popular. 

These schemes allow you to spread the cost of purchases, easing immediate financial pressure. However, convenience often comes at a cost, and it’s important to weigh up the pros and cons, especially if using BNPL could lead to increased prices of up to 10%.

What Are BNPL Schemes?

BNPL services allow you to divide the cost of your purchases into instalments, often over a few weeks or months. Many offer interest-free options if payments are made on time, while others might charge late fees or interest, depending on the plan.

While these schemes can be a lifesaver for spreading out payments, they also come with risks—particularly during the high-pressure holiday season.

The Pros of Using BNPL for Christmas Shopping

1. Immediate Access to Gifts

BNPL lets you purchase items straight away, even if your budget is tight. This can be particularly helpful for snagging sales or securing items that might sell out before payday.

2. Spreading Costs Over Time

Rather than paying a lump sum upfront, BNPL breaks your expenses into smaller, more manageable payments. This can help you balance your Christmas spending with other financial obligations.

3. Interest-Free Options

Many BNPL providers offer interest-free repayment plans, as long as payments are made on time. This can make it a more attractive option than traditional credit cards with higher interest rates.

4. Convenience

BNPL is often integrated directly into online checkouts, making it easy to choose this option when shopping.

The Cons of Using BNPL for Christmas Shopping

1. Risk of Overspending

BNPL can make purchases feel more affordable than they truly are, encouraging you to spend beyond your means. The temptation to “add one more gift” can quickly lead to mounting repayments.

2. Potential for Hidden Costs

If BNPL increases the price of your purchase by 10% or more, you’re effectively paying a premium for spreading out payments. This extra cost can add up, especially when buying multiple gifts.

3. Late Payment Penalties

Missing a payment can result in late fees or interest charges, which can quickly snowball. Some providers report missed payments to credit agencies, potentially affecting your credit score.

4. Psychological Impact

The "buy now, worry later" mindset can create financial stress once repayments begin, particularly in January, when budgets are often stretched.

5. Limited Consumer Protection

Unlike credit cards, BNPL transactions don’t always offer the same consumer protections, such as chargebacks for faulty or undelivered goods.

When BNPL Might Be Worth It

BNPL can be a helpful tool if:

You’ve carefully budgeted and know you can meet the repayment schedule without issue.

The provider offers an interest-free option, and you’re confident you won’t incur late fees.

You’re purchasing high-ticket items where spreading costs is genuinely beneficial.

When to Avoid BNPL

You might want to steer clear if:

The price increase outweighs the benefit of spreading payments.

You’re already juggling multiple debts or tight finances.

There’s a risk you might struggle to make repayments on time.

You’re tempted to use BNPL for impulse buys rather than planned purchases.

Tips for Responsible BNPL Use

Budget Carefully: Treat BNPL repayments as part of your monthly expenses and ensure they fit within your budget.

Track Your Spending: Keep a record of all BNPL purchases to avoid losing track of your total repayments.

Read the Terms: Understand the repayment schedule, fees, and potential interest charges before committing.

Plan Ahead: Only use BNPL for items you genuinely need or can’t afford upfront, and avoid using it as a way to buy gifts impulsively.

Explore Alternatives: If the price increase is significant, consider using a credit card with cashback or interest-free offers instead.

Final Thoughts

Buy Now, Pay Later schemes can be a handy way to manage Christmas shopping, but they’re not without risks. If the convenience comes at the cost of higher prices or potential financial strain, it’s worth considering other options. At its heart, the festive season is about connection and thoughtfulness—not overspending.

Before using BNPL, take a step back and evaluate your budget and priorities. A well-thought-out plan can ensure a joyful, stress-free Christmas for both you and your wallet.