Martin Lewis on what scares him about ‘buy now, pay later’ schemes
Martin Lewis has told Phillip Schofield and Holly Willoughby that ‘buy now, pay later’ firms in an unregulated state “scare” him and revealed why.
The money saving guru was speaking to the This Morning hosts, discussing everything from holiday advice to borrowing money and spoke openly about ‘buy now, pay later’ schemes and how they can look enticing, but why you shouldn’t choose them when you checkout online.
Martin spoke about how services such as Klarna and Clearpay offer a free, loan based system which, left unregulated, could leave customers in financial issues, as they lose their chance to use services such as the financial ombudsman for help if they need it.
Speaking to Holly, Martin said: “Now, when I do the pros here, you’re going to say ‘This is fantastic!’, It’s easy!”
Holly added: “It doesn’t sound like a loan does it?”
“No, this is the thing, when you pay online now, it’s virtually everywhere,”, added Martin:
“It say’s ‘Spread the cost across 3 months’, you know, Klarna, Clearpay and others are the ones offering this, it’s exploded.
“It’s interest free, it’s easy to get because you’re not being credit scored, you know, you pay it over three months, what’s the problem?
“I will tell you the problem with ‘buy now, pay later’ and why I was one of those leading the charge to get it regulated, which it will be regulated, but it isn’t yet, which means if you have a problem with it, and people do, you can’t go to the ombudsman, there’s no independent adjudication yet.
“Do you know know why buy now, pay later is free?”
Holly admitted: “No.”, before Martin said: “I shall tell you why.
“Because it massively increases sales for retailers, so the money is made from the retailer, not from the customer, because pay later is a huge pump to get people to buy more.”
Curious, Phil asked: “Why is that a bad thing?”
Martin said: “Why is that a bad thing? Well let me translate that.
“What we are doing is we’ve got a payment system that encourages people to buy things that they can’t necessarily afford, don’t necessarily need and they’re doing it through lending through a loan based system.”
Phil’s face changed as he realised the problem.
Martin added: “I go back to my initial point, it’s a really important question because you really have to work it through.
“Don’t borrow unless you need to.
“So, people are using ‘buy now, pay later’ to get stuff they don’t need and it’s a form of borrowing, which is why it scares me.”
This Morning returns at 10am every weekday morning on ITV.
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