Overdrafts, Buy Now Pay Later (BNPL), and credit cards can feel like free money in your 20s. Tap the card, spread the payment, worry later.
But the reality? These are some of the most expensive ways to borrow.
Overdrafts
Banks often sell overdrafts as “just a buffer.” But some charge up to 40% interest a year.
Example: If you’re £100 into your overdraft and stay there for a year, you could owe £140 back. That’s an extra £40 just for borrowing £100.
Buy Now, Pay Later (BNPL)
Klarna, Clearpay, and similar schemes look like an easy way to spread payments. But if you miss one, you can be hit with fees and your credit score may drop.
Example: Miss a £100 repayment and you might get a £12 late fee, plus interest piling up. Instead of £100, you could owe £112+ and damage your credit score.
Credit Cards
Credit cards can be useful if you clear the balance each month. But interest rates of 20%+ APR mean debts grow fast if you only pay the minimum. Example: Spend £100 and only pay the minimum each month – you could end up paying £120 or more over time, and still owe the original balance for months or even years.
The key message: Every £100 borrowed can easily turn into £120, £130, or £140 if debts aren’t managed carefully.
What starts as “just £50 here and there” can snowball into thousands. We’ve helped clients in their 20s with £10k+ debt built mostly from BNPL and overdrafts.
What you can do
- Track how much of your monthly outgoings are actually debt repayments
- Pay more than the minimum where possible
- If it’s already unmanageable, contact someone like us to help you bring it into one affordable payment
