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Are Buy Now, Pay Later schemes ruining your chances of getting a mortgage?

by LLP Editor
16th Mar 21 11:18 am

It has been reported by Compare The Market that 40% of shoppers are unaware that missed repayments for Buy Now, Pay Later schemes can negatively affect credit scores.

As research from money management app HyperJar has found sadly one in five people are in their worst financial position ever and are unable to make the repayments it begs the question, are these schemes exploiting vulnerable consumers and if so, how close are we to financial ruin?

As the stamp duty holiday ends in July, the nation is trying to make the most of the lowered fees by rushing to get mortgages, saving up to £15,000. So, now is an incredibly important time for many to take note of their credit scores to ensure they are not caught out.

It’s easy to miss a payment from British Gas or forget to change payment details for a mobile phone contract, but if consumers continue to rely on Buy Now, Pay Later schemes and not take into consideration that it is effectively an unregulated loan company, there is real danger of failing to meet necessary credit score ratings and having to put life on hold for a while to rectify the damage done.

HyperJar can provide an alternative way to spend money, encouraging consumers to Pay Now, Buy Later, and be rewarded with up to 4.8% interest by doing so. Shoppers can rest assured their money is being spent responsibly and in a way that accumulates interest, rather than debt.

Aiding both retailers and consumers through what HyperJar call ‘spending with intent’, loyalty is built between both parties via a simple but highly effective digital version of jam-jar budgeting.

How it Works:

App users allocate money to retailers ahead of spending, receiving an average 4.8% Annual Growth Rate on every penny for up to 12 months. An odometer in the app shows this increased buying power growing in real time. Committed money must be spent with the business it’s committee do, but there is no time limit and it can be shared or gifted to other HyperJar users.

HyperJar Local will bring small, independently-owned businesses into a merchant hub alongside HyperJar’s existing national partners. This would make HyperJar the first product to incorporate a digital wallet, large corporates and smaller independents in an integrated ‘save where you shop’ proposition.

Key Research Statistics:

  • 19% (8,921,000) agree that, due to the Covid-19 pandemic, they are in their worst financial position ever
  • 70% (31,500,000) say that their bank doesn’t help them budget and plan day to day finances
  • 52% (25,093,000) agree that the current banking structure leaves them with no incentive to save
  • 47% (18,981,000) agree that since the pandemic, they now acknowledge the importance of tackling bad financial habits
  • 19% (8,737,000) report that the fallout from Covid-19 has left them with no savings at all
  • 26% (12,522,000) say that, even before Covid-19, they had no savings or emergency buffer
  • 26% (12,715,000) admit to having no emergency funds to fall back on in the future
  • 18% (8,594,000) believe their finances are the least organised part of their life

Mat Megens, founder and CEO at HyperJar, offers an insight into how HyperJar can help change the way we spend.

“There’s been a hostile environment for saving and planning for years, and the gravitational pull of easy credit has never been stronger. A new way for people to budget and spend well is overdue.

The effectiveness of splitting out budgets and naming savings goals is well known, and our early customers tell us that adding a fraction more friction to their spending – taking a bit of time to think about what they want to spend in future – works. Visualising and allocating their money like this gives them clarity, control and confidence.”

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