14 Oct 2022

M&S launches its own version of 'buy now, pay later' – should you use it?

Sparks Pay customers can get up to 45 days interest-free

Marks and Spencer has launched its own regulated ‘buy now, pay later’ scheme which will let shoppers make purchases interest-free for 45 days.

The scheme, called Sparks Pay, is only available when buying items on the M&S website or app, and will give users up to £500 credit.

But shoppers who don’t pay off their items within 45 days will be charged interest at a rate of 23.9%.

Here, we explain how Sparks Pay works, including what eligibility measures are in place and if it’s the right way to borrow for you.

How does Sparks Pay work?

To use Sparks Pay, you’ll need to be signed up to M&S’s loyalty scheme Sparks, which is free to join.

Once signed up, you’ll be given the option to use Sparks Pay when shopping on the M&S website or app to spread the cost of purchases such as clothing and homeware.

Subject to eligibility checks, customers can get instant online credit of up to £500, with up to 45 days interest-free as standard, though you may be offered less.

M&S is offering customers up to 76 days’ interest-free on their first order when they pay their balance in full, and up to 45 days for later transactions.

Once you've been accepted, you’ll be asked to set up a monthly direct debit to make repayments, and you can choose the amount you repay – either the minimum repayment, or the full balance.

If you don’t pay off your balance by the required time, you’ll be charged interest of 23.9%.

You can manage payments in your account on the M&S app, or on its website where you can see recent transactions and statements.

Find out more: buy now, pay later explained

How much can you borrow?

You can borrow up to £500, which can be spread between smaller items. For example, you could use Sparks Pay to pay £100 for a coat and £400 on a sofa.

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Are there any restrictions?

You will need to be over the age of 18, earn more than £6,800 a year and be a UK resident to use Sparks Pay.

Customers will need to pass eligibility checks before they are offered credit, which includes a hard credit check. This will leave a mark on your credit file.

Sparks Pay is only available online and on the app right now, but it’s due to be rolled out in stores nationwide next year.

As many stores sell a range of products, such as groceries, we’ve asked M&S if there will be limits on which products customers can use Sparks Pay on when it hits the shops in 2023.

Find out more: how to check your credit score for free

What if you miss a payment?

If you fail to make the minimum repayment, you’ll be charged a late fee of £12. A missed payment will also be reported to credit reference agencies, which will leave a mark on your credit file. This could affect your overall credit score.

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Are purchases protected?

M&S said all customers would have the protection and assurance of its returns, refunds and complaints handling process.

M&S Bank is regulated by the Financial Conduct Authority (FCA), unlike some other BNPL providers, and therefore purchases over £100 are protected by the Consumer Credit Act.

While Sparks Pay is regulated, M&S does offer other forms of unregulated BNPL schemes, including Clearpay, among its available payment options on its online checkout.

Which? is calling for urgent regulation of the whole BNPL market to ensure consumers are better protected when choosing how to pay.

Find out more: 6 things to know about BNPL regulation

Is this the best way to borrow?

M&S says its Sparks Pay would offer a ‘new and simple’ way to pay that would offer a ‘seamless online shopping and payment experience’, but you'll need to weigh up whether or not it's right for you.

Before signing up, there are a few things you'll want to consider:

You might be able to borrow at a cheaper rate

With Sparks Pay, your purchases will be interest-free for 45 days, but after this period you’ll be charged interest of 23.9%.

If you don't think you'll be able to pay off your purchases in that time, you may be better off with an interest-free credit card.

For example, M&S Bank has a Shopping Plus Offer credit card with up to 24 months interest-free on purchases at an APR of 21.9% (variable). With this card you can also earn rewards on your spending: you’ll get one reward point per £1 spent at M&S and one reward point for every £5 spent elsewhere. Once you have 100 reward points you can convert this into £1 in M&S vouchers.

Find out more: best interest-free purchase credit cards

You need to be realistic about your other BNPL debt

Buying with BNPL may be easy in the short term, but our past research has found these offers can encourage shoppers to spend more than they normally would compared with having to pay upfront. As a result, it may be more difficult to keep on top of repayments.

Although M&S runs affordability checks to make sure customers can manage the debt, it won’t necessarily know if you’ve entered into payment agreements with unregulated BNPL firms, unless these firms have also shared your data with credit reference agencies.

This means M&S might decide you can afford to pay back more than you actually can, and it might give you a credit limit that is too high.