Don’t let ‘Black Friday’ put you in the red – this blog contains a spending warning
As we head towards the end of what has been a difficult year for many, you might feel inclined to lavish your loved ones (or yourselves!) with gifts a-plenty. And with most Christmas shopping taking place online this year it’s easily done, with a constant stream of ‘unmissable’ offers at the end of a ‘buy now’ button. The pressure is on.
We’re not all party-poopers or killjoys in the Student Advice team – we’re a practical bunch with an eye on the longer term and a desire to alleviate some of that pressure. So, read on for some warnings and tips about spending over the festive season….
An American tradition, which marks the start of the Christmas shopping season. Technically this year, it should start on Friday 27th but many retailers extend it to a week or so either side of this date.
There’s no doubt that there are bargains to be had…..but ONLY if you’d planned to purchase anyway and can now take advantage of lower prices. It’s very easy to get caught up in the hype, so before you hit the digital check out, take a moment to pause and reflect before buying – do you need it and can you afford it?
Buy Now Pay Later (BNPL) schemes
This method pf payment is becoming increasingly popular and (too) easy to use. Retailers are offering BNPL options when you checkout through companies such as Klarna, ClearPay and LayBuy. They are particularly attractive to some as no hard credit check is carried out and they offer interest and fee free shopping. These companies make their money by taking a cut from the retailer.
Individuals are given a spending limit (based on ‘soft’ credit check), which is usually in the £100s rather than £1000s.
Unlike with credit cards, the repayment period is short– usually between 3-8 weeks. You’re required to enter your card details at checkout, instalment dates are agreed and then taken automatically from your account. Simple.
However, when you chose this method of payment you are entering into a borrowing arrangement and there can be late payment penalties if you miss an instalment and this in turn could affect your credit score (Klarna states it doesn’t charge late payments fees). Non-payment can result in debt collection agency involvement.
Another important thing to note, especially at this of year, is that your consumer rights aren’t protected when you BNPL. This means if you use Klarna, Clearpay or Laybuy to purchase an item on your credit card and it turns up faulty or doesn’t arrive at all, you won’t be able to call on your credit card provider to pursue a Section 75 refund. Instead, you’d either have to explore what protection your BNPL provider gives you or take up the dispute direct with the retailer.
If 2020 has taught us anything, it’s to be grateful for and appreciate the simple things in life, many of which cost nothing at all. Sharing time with friends or family this Christmas could be the best gift we give each other…..but if not here are few free/low-cost ideas. Talk to family/friends and agree in advance – they may thank you for it!
· Secret Santa – everyone buys just one gift – set a modest budget!
· Set a date (months ahead) to get together for a nice lunch/experience – pay for yourselves but share the memories
· Make homemade presents – food treats, crafted items, framed special photos
· Gift favours – make a voucher pledging anything from babysitting or walking the dog to washing up for a week!?
By spending wisely now, you can face 2021 feeling more in control of your finances, which equals a Happy New Year.
Student Advice Service