Credit

Buy now, pay later: the rules changed, the trap did not

Klarna, Clearpay, PayPal in 3, Zilch. You have used one, or you have watched a friend use four. On 15 July 2026 UK law finally caught up with them, which means almost every guide to buy now pay later written before that date is now out of date. Here is what actually changed, what it hands you, what it quietly does not, and the one thing about these apps that no rule can fix.

The short answer

Buy now, pay later is credit. It splits a purchase into instalments and charges no interest, which is exactly why it stops feeling like borrowing. Since 15 July 2026, UK providers must check you can afford it, must give you the same refund protection you get on a credit card for purchases from £100 to £30,000, and must answer to the Financial Ombudsman Service. What no rule touches is the effect on you: research that measured real bank accounts found that people who start using it spend more, not the same amount more slowly.

Why it never feels like debt

A loan has a moment. There is a form, a rate, a number you have to look at, and a second where your brain does the sums. Buy now, pay later has no moment. There is a button next to the card logos, you tap it, and the price on the screen drops by three quarters.

That is the product. Not the credit, the anaesthetic. And it is bought and paid for: the shop pays the buy now pay later company a cut of every order that goes through that button. Shops do not pay for buttons that make people spend less.

It is not a fringe thing any more. A quarter of UK adults used buy now pay later in 2024, up from 14% the year before, and the average purchase was £114. Over £13 billion went through it in a single year.

An example, not real data. Four ordinary orders at the UK average of around £114 or below, split three ways.

What actually changed on 15 July 2026

Until that date, buy now pay later sat in a hole in the law. It was credit, but it was exempt from the rules that apply to credit. That hole is now closed. Five things you did not have before:

Affordability checks. A provider has to make proportionate checks that you can repay before it lends. It cannot just hand you a plan because you have a phone.
Refund protection. On purchases from £100 to £30,000, the provider is jointly liable with the shop. If the thing never arrives, arrives broken, or the shop goes bust, you can go after the buy now pay later company instead. This is the same protection credit cards have had for decades, and it is the single most useful thing on this list.
Clear information up front. Amounts, dates, and what happens if you miss one, before you commit, not in an email afterwards.
The ombudsman. If a complaint goes nowhere, you can take it to the Financial Ombudsman Service, free. That includes a payment wrongly marked on your credit file.
Help before collectors. Someone in difficulty has to be offered support and pointed at free debt advice, rather than handed straight to a debt collection firm.

Notice what that list tells you. Nobody writes affordability rules, ombudsman access and debt advice duties for a product that was working fine.

What the new rules do not do

This is the part the news coverage skipped, and it matters more than the good news.

They are not retrospective. The protections apply to agreements taken out from 15 July 2026 onwards. A plan you opened in June is still running under the old rules.

"Proportionate" means light. An affordability check on £40 of trainers is not a mortgage application. It is a check, sized to the risk, and the risk of £40 looks small to the lender. It looks small four times over too.

Nothing joins up your plans. Klarna cannot see your Clearpay agreement. Clearpay cannot see your Zilch one. Each provider checks whether you can afford its plan. Nobody, anywhere, checks whether you can afford all of them at once.

Late fees are still legal. No interest is not the same as no cost, which brings us to the numbers on the checkout page nobody reads.

The price of one bad week

Both of the big two publish their fees. Neither puts them next to the button.

Clearpay: £6 when a payment is missed, and a further £6 if it is still unpaid seven days later. Fees are capped at £24 or 25% of the order value, whichever is less.

Klarna: £5 per late payment, charged after a seven day grace period and at least four reminders, capped at 25% of the order value and no more than two fees per order.

Now put a real order through it. Miss both Clearpay deadlines on those £48 trainers and you pay £12. That is a quarter of the price added in a fortnight, on something advertised as interest free. Put that in the same units as a credit card and it is not in the same league, it is not in the same sport. Our page on the wildest end of borrowing has the comparison, and this beats most of it.

What lands on your credit file

Providers run credit checks when you apply, and those searches can be recorded. Missed payments get reported to the credit reference agencies and read by every future lender. Whether your on time payments show up depends on which provider you used, so the risk is one directional: slipping can hurt you, being perfect may not help you.

That matters more at 19 than it feels like it should. A file with several small credit agreements and one missed payment is not a neutral file. It is the file a letting agent, a phone network and eventually a mortgage lender will read. If you want the mechanics of that, start with who is keeping score on you.

The bit no rule can fix

Here is the finding that changed how we think about this, and it is not from a bank or a campaign group. Three researchers at Harvard Business School got hold of anonymised bank account data and watched what happened to real people before and after they started using buy now pay later.

Spending went up. Not shifted, up. Total spending rose by around £130 worth a week at the moment of first use, settling at a lasting increase of about £60 worth a week. Retail's share of everything they spent rose by 6.3 percentage points. And the tell: overdraft fees became 20% more likely, and low balance fees 17% more likely. Money that looked like it cost nothing was quietly costing them somewhere else.

Two honest caveats. That study used United States accounts and dollars, so read those figures as the size of an effect, not as your weekly budget. And the effect held even for people who did not look short of money, which is the uncomfortable part: this is not a story about being skint. It is a story about what happens to anyone's spending when the price stops hurting.

Trap ahead: the total does not exist anywhere

Every other kind of borrowing has a statement. A card has a balance, a loan has a schedule, an overdraft has a number with a minus in front of it. Four buy now pay later plans have none of that. Your bank app shows four unrelated card payments. Each provider shows one small tidy plan. The only place your real total exists is your own head, and every design choice in these apps is aimed at keeping it out of there. Twenty two per cent of buy now pay later users fell behind on at least one plan in a year, and almost none of them planned to.

The moves

Screenshot this bit

Ask the full price question. Would I buy this today if I had to pay all of it today? If the answer is no, you do not have a payment problem, you have an answer.
Write every open plan on one screen. Provider, amount left, dates. Nothing will do this for you. Most people underestimate their total by a lot.
Never use it for food, fuel or bills. Debt charities treat this as the clearest early warning there is, and users of these apps are twice as likely as other borrowers to be covering essentials with credit.
Keep purchases from £100 upwards on it, not below. If you are going to use it at all, that is where the new joint liability refund protection bites. Under £100 you get the debt and not the shield.
Keep paying until a refund actually lands. Sending something back does not pause the plan. The return and the instalments are two separate systems and they do not talk.
If a payment is going to fail, say so before the date. Since 15 July 2026 they have to offer support and point you at free advice instead of a collector. That duty is worth using.
Free help is free. StepChange, National Debtline and Citizens Advice are charities, not lenders, and they do not charge. Anyone asking you for a fee to sort out a debt is selling you something.

Check it yourself

The rules and the date. GOV.UK: Buy-Now, Pay-Later rules come into force: affordability checks, refund rights, ombudsman access, and support before debt collectors. In force 15 July 2026. Checked 26 August 2026.
The detail, including what is excluded. Which?: 7 things you need to know about the new rules: joint liability on £100 to £30,000, and agreements made before 15 July 2026 keep the old rules.
Clearpay's own fee page. Clearpay: why have I been charged a late fee: "£6 late fee will apply", a further £6 after seven days, "capped at £24 or 25% of the order value, whichever is less".
Klarna's own fee announcement. Which?: Klarna to start charging late fees: £5 per late payment after a seven day grace period, capped at 25% of the order and two fees per order.
How big it has got. UK Finance: Buy Now Pay Later trends in the UK, published 24 November 2025: a quarter of UK adults used it in 2024, up from 14% in 2023, average purchase £114.
Who falls behind. Fair4All Finance: Buy Now Pay Later, a review of the market, risks and trends, January 2026: 22% of the buy now pay later group had fallen behind on at least one transaction in the previous 12 months.
The spending study. Di Maggio, Katz and Williams, Harvard Business School, August 2022: total spending up about £130 worth a week at adoption and about £60 worth a week lasting, overdraft fees 20% more likely. United States account data.
What to do if it goes wrong. Citizens Advice: buy now, pay later: your rights, missed payments, and free help.

Questions people ask

Does buy now pay later affect my credit score?

It can, both ways. Providers run credit checks when you apply, and missed payments are reported to the credit reference agencies where every future lender can read them. Whether your on time payments are reported varies by provider, so a clean record may earn you nothing while a slip costs you plenty. Treat it as credit, because since 15 July 2026 UK law does.

Is Klarna actually free?

The instalment plans charge no interest, so used once and paid on time the plan itself costs you nothing. That is not the whole cost. Miss a payment and Klarna adds £5 after a seven day grace period, capped at 25% of the order and two fees per order. And the measured cost is behavioural: research on real bank accounts found people spend more overall once they start using these apps, which is why shops pay to have the button there.

What happens if I miss a Clearpay payment?

Clearpay charges £6 straight away and another £6 if the payment is still outstanding seven days later, capped at £24 or 25% of the order value, whichever is less. Your account is normally blocked until you are up to date, and a missed payment can be reported to the credit reference agencies. Since 15 July 2026 they also have to offer you support and point you at free debt advice rather than passing you to a collector straight away.

Can I get a refund if I paid with buy now pay later?

For agreements made from 15 July 2026, on purchases from £100 to £30,000, the provider is jointly liable with the shop. If the item never turns up, arrives faulty, or the retailer goes bust, you can claim against the buy now pay later company as well as the shop. Below £100 that protection does not apply. Either way, keep making the payments until the refund actually lands, because returning something does not pause the plan.

Is buy now pay later regulated in the UK?

Yes, from 15 July 2026. Before that date it sat in an exemption and was credit without the rules that come with credit. Now providers must check affordability, give clear information up front, offer support to anyone in difficulty and answer complaints through the Financial Ombudsman Service. Agreements taken out before that date stay under the old rules.

Does buy now pay later stop me getting a mortgage?

One plan, paid on time, is unlikely to decide anything on its own. A pattern is different. Lenders look at your recent bank statements as well as your credit file, and several small instalment plans running at once reads as someone whose spending is already committed. Missed payments read worse. If a mortgage is anywhere in your next few years, the useful move is to have no live plans in the months before you apply.