There isn’t an area of South Wales which hasn’t been badly hit by the pandemic. In fact across all of the UK, we hear of daily financial struggles faced by so many. From international football clubs, to the local small business being run from the back bedroom.
Personally we are all feeling the pinch this difficult period has placed on us. To make matters more difficult, nearly a quarter of shoppers who have used a Buy Now, Pay Later service say they spent more than they planned, thanks to the easy to access credit products encouraging impulse buying.
A survey finds that more than a third have struggled to pay back items they have bought using a Buy Now Pay Later scheme.
- 35 per cent admitted they use Buy Now Pay Later schemes because they can’t afford the items they want.
- 25 per cent have had to ask family or friends to pay back money, 1 in 10 are left struggling to pay their rent.
- 62 per cent left with feelings of anxiety and depression.
- 81 per cent worried about long-term future debt it could cause.
Consumer watchdogs are calling for the firms that offer BNPL finance options to be fully regulated to help better protect shoppers. One of those is OpenMoney. They were set up to make sure that everyone who wants access to financial advice can get it.
OpenMoney conducted research last year year, and learned the nation’s finances were in a precarious position before the prolonged effects of COVID. There’s also a serious worry that more people than ever are turning to Buy Now Pay Later (BNPL) services like Klarna, Clearpay and Afterpay.
Klarna is the leading BNPL firm in the country. All services allow users to make purchases through affiliated websites and pay later, with the selling point being they charge no fees or interest.
A survey, conducted last October, found that 26 per cent of BNPL users hadn’t intended on using BNPL until it appeared at the checkout. It also shows that the service targets the under 30s.
In 2017, Klarna commissioned a study with the University of Reading into online shopping behaviour. The report, intended for partner retailers, explains how to persuade shoppers to make “emotional” purchases instead of “logical” ones.
“The less the customer is required to think about inputting data, the more likely they are to make a purchase without too much consideration.”
Co-founder, Anthony Morrow, launched OpenMoney to change the financial service industry for the better by offering the accessible, affordable advice and direction consumers need to move forward with their finances, and to empower consumers to make more informed decisions about services just like BNPL.
“I’m not a fan of BNPL because I think they are focused on the worst parts of customer manipulation – material aspiration and fear of missing out. These are powerful devices to use when convincing people to spend money they don’t have. As we’ve seen over last couple of decades, and the rise in short-term debt, it causes lots of problems for people. These schemes were bad news before the pandemic and now they just feel dangerously inappropriate.”
As a result of always putting the consumer first and being pretty vocal about his views, Anthony was awarded the Consumer Champion of the Year Award at the 2020 MoneyAge Awards.
“I think, as with most awards, it’s always great to have your work or efforts recognised but they aren’t the reason that we do what we do at OpenMoney. There are so many great businesses and people out there trying to improve outcomes for customers, it’s simply flattering to be considered one of them.”
We spoke to Anthony, who previously worked as a consultant for such financial giants as KPMG and Deloitte. Also Alice Tapper a financial campaigner. She launched the #regulateBuyNowPayLater which has since led to investigations by both the FCA and ASA.
OpenMoney describe Buy Now Pay Later; as the financial equivalent of having your cake and eating it. Whilst these increasingly popular services can be useful for some, they can also be an unhelpful gateway into over-spending and problem debt. So, if you’ve found yourself thinking it’s time for a change, here’s how OpenMoney suggest you exit that toxic relationship and start fresh:
First off, recognise that the spending wasn’t healthy. Be honest with yourself: are you spending more than you would if BNPL wasn’t available? Are you feeling stressed about money? Are you unsure of how much you’ve spent? If the answer to any of these questions is yes, now’s the time for a new beginning.
Go cold turkey
Yes, it’ll suck for a while, especially if you’re used to those late night shopping mood boosts. But the pay off is freedom from financial stress, which will feel way better than that new bikini ever could.
Block and delete
You know the drill: to resist temptation, cut off communication. Unsubscribe from promo emails and unfollow the most tempting accounts on social. If there’s a website you find particularly hard to stay away from, install a plug-in like Icebox to stop you in your tracks. Just like with a real ex, if you don’t have their number, you can’t text them.
Recognise your emotions
Now it’s time to figure out why you were spending more than you wanted to in the first place. Shopping can be emotional, so try to figure out what those online purchases were really about. Were you bored? Longing for a change? Dealing with an actual break up? When you identify what’s really going on for you, it’ll be easier to replace the shopping with something more meaningful.
Find a rebound
But in a healthy way. It might be Ben and Jerry’s for a bit but there are lots of ways to do self-care that are totally free. When you’re feeling tempted, put your phone down and take a minute. Maybe it’s as simple as FaceTiming your mum or going for a run. Figure out what gives you a similar boost.
Alright, now that you’ve done all that work, make a plan to put unhealthy habits in the past. If you’ve recently purchased stuff that you can still return, do that. Then make a realistic plan to pay off your remaining balance ASAP. Make a note of when payments are due by putting a reminder in your calendar, so you don’t accidentally miss any.
Remember, Boohoo doesn’t give a **** about your budget. You’re the only one who can give your money purpose and decide how to spend it. Try making a budget. It’s a great way to feel confident about what you do with your money, while still allowing you to buy the nice things you want.
Credit products aren’t all bad as long as they’re used responsibly. For bigger ticket items that are a necessity for your work or life (think: laptop, car) it can be a good option as it allows you to split the cost into manageable amounts. It’s always preferable to pay outright than take on debt, so do that if you can. If you do decide to go for BNPL, make sure you can keep up with the payments and that you make them on time. Also, check the fine print for hidden fees and interest that might get you in trouble down the road.
If you’d like to find out more about the campaign and see what else OpenMoney offer, just go HERE.