Beware the real cost of 'Buy Now, Pay Later' offers

It can be very tempting to take up the option of paying for something you really want 'interest-free over six months', especially if it's a big-ticket item like an expensive couch, for instance.

However, while it may seem like you're winning here, Galileo Capital's Warren Ingram warns that there are some potential catches to 'Buy Now, Pay Later' (BNPL) offers.

Firstly, many retailers who provide this option actually charge more for a specific item than others do, whether you are paying cash or over six months, he cautions.

And then, remember that you remain interest- and fee-free only if you stick to the terms of the agreement.

"Miss one payment, and all of a sudden you start to realise the catch - they start the interest on Day One, no matter where you are in your repayment schedule. Then there are admin fees that they start to charge you for doing this and so, before you know it, the item that could have cost you, say, R1,000 is suddenly costing you R2,000."

Most people also don't use BNPL just once, they use it multiple times, Ingram says.

"Before you know it, you've got multiple payments on items that you cannot sell to repay your debts and the penalty fees are increasing monthly at a rapid rate."

Studies show people actually spend 20-30% more when using BNPL.

Ingram advises using this extended payment only in a real emergency, for example if your laptop dies, you need it for work the next day and you don't have a big enough emergency fund to cover the cost.

"Anything discretionary you see that you want, wait 24 hours. If you still want it tomorrow AND you can afford it in cash, buy it."

Most of the time, you'll find that the urge passes, says Ingram.

Scroll up to the audio player to hear more from this seasoned financial adviser