Butter - Spread the cost of your trains tickets?

BluePenguin

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Train ticket prices in this country have risen so much that some people cannot afford to pay for them all in one go these days

But do not worry, this service claims to be able to spread the cost of those eye waveringly high ticket prices for you. I was in shock when this popped up on my Facebook earlier.

Is it wise to encourage people to make journeys they cannot afford, getting themselves into debt in the process?

Alt Text: The image depicts a photo of a red train passing through a station from platform angle. The advert reads “Get your train tickets the smarter way with butter. Spread the cost over 2, 3 or 4 instalments. Shop now, pay later!” Below the photo of the train is a caption which reads shop now pay later on a purple background. Thetrainline logo is also present.
 

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R

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Yes, I don’t see a problem with it. It helps people manage their cash flow, particularly if they’re only paid weekly or bi-weekly. I use this type of thing for purchasing clothes.
 

Ianno87

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Similar schemes have existed for years for annual season tickets. Makes them accessible to those for whom paying in one go up front would be prohibitive.

As @startingaparty says, if it's properly budgeted for, it's not an issue.
 

swt_passenger

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If you were to propose banning this, presumably you could also justify banning credit card ticket purchase?
 

BluePenguin

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It sounds as though some of you are more sensible with money than the general population.

I know people who have got themselves into thousands of pounds of debt over buy now and pay later schemes.

An annual season ticket loan scheme is surely different to someone using a scheme for leisure travel. Also, the cost comes out of your wages. Nobody would buy a season-ticket to travel to a job that did not pay enough to afford the instalments anyway

If you were to propose banning this, presumably you could also justify banning credit card ticket purchase?
Potentially, although a lot of businesses pay by credit card. Those who are self-employed do also, some for the points and rewards

I believe that advertising on Facebook a method to get train tickets now, which people may not be able to afford is wrong. These adverts are targeted don’t forget - some individuals may have looked up tickets to some far flung long destinations and decided not to finish their purchase…until they saw this advert.

In addition, getting to the destination is not the only cost, once you are there there is food and accommodation to pay for which this app can also cover for you. More and more debt mounting…
 
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3rd rail land

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Similar schemes have existed for years for annual season tickets. Makes them accessible to those for whom paying in one go up front would be prohibitive.

As @startingaparty says, if it's properly budgeted for, it's not an issue.
My thoughts exactly. I used to pay for my London zone 1 - 2 season ticket through Commuter Club which was cheaper than buying monthly tickets and I got the advantages of a gold card although obviously paying the whole amount up front is the cheapest option.

If you budget properly such schemes can work well. The problem arises when people think if they pay in instalments they can actually afford something when in fact they can't and get themselves into debt in the process.
 

Joe Paxton

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Butter looks to be a 'Buy Now, Pay Later' provider similar to Klarna, which has become popular of late.

I'm wary of such schemes as they all have a whiff of payday loans, and they encourage reckless overspending particularly amongst young people.

This is qualitatively different from a season ticket loan.
 

BluePenguin

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Coincidentally, Klarna is actually one of the companies one of my friends has got into trouble with. They are in serious trouble and I have encouraged them to get professional advice

Of course, buying something on credit you will be able to afford it later is sensible. Although a lot of these by now, pay later companies do you not make it clear what you are entering into.

The focus is on how easy it is to get what you want to now and not to worry about how it will be paid for in the future. The film Confessions of a shopaholic is a good example of this. The main character gets into debt of over her extravagant spending on clothes. If Klarner had existed back in 2009 I am sure a mock version of it would have a featured in the film.

Perhaps fares could be fairer as they are in most of Europe.
Most definitely, train travel to some is a luxury but to others is a necessity. It’s a no-brainer that fares in this country must come down, not frozen according to the rate of inflation but actually reduced
 

alxndr

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I can think of some niche circumstances where I think something like this would be appropriate for someone who can't afford the upfront cost but needs to travel to visit a seriously ill relative/get out of a harmful situation/attend a job interview and doesn't have a credit card or someone to ask for a loan.

I don't know the rates, but it might even be sensible if it's the week before payday, you're skint, but there's a relatively cheap Advance fare you want to bag.

It does sound very much like Klarna though, and I distrust that. I see far too many using it as a way to buy masses of fast fashion items and getting themselves in trouble. I've seen the aftermath for the families of people who've got themselves in that mess as well. I did try to avoid anywhere that showed Klarna-esque things as a payment option, but it's so ubiquitous now...
 

zero

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It is no different to buying anything else on finance / credit. As long as the total cost is clearly explained and displayed prominently, people have to take responsibility for themselves
 

Mcr Warrior

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How does the 'modus operandi' of businesses such as 'Klarna' and 'Butter' differ from the likes of 'Wonga' which went into administration a few years ago?
 

BluePenguin

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Butter looks to be a 'Buy Now, Pay Later' provider similar to Klarna, which has become popular of late.

I'm wary of such schemes as they all have a whiff of payday loans, and they encourage reckless overspending particularly amongst young people.

This is qualitatively different from a season ticket loan.
Thank you Joe, this is exactly my point. There seems to be quite a lot of these providers popping up lately, this is the first one I’ve received an advert for regarding train tickets

Our generation does not appreciate the true value of money and cannot budget properly as it is
 

Joe Paxton

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It is no different to buying anything else on finance / credit. As long as the total cost is clearly explained and displayed prominently, people have to take responsibility for themselves

I think a big criticism of Klarna and other similar services is that the arrangement is not clearly explained, nor are the consequencesof non-repayment. Instead it's all about appealing to satisfying the (manufactured) desire of the moment.

I think this comment piece by Eva Wiseman in the Observer is on the money:
Debt for women has been rebranded as a naughty little treat - Observer
Many of the problems that come with these companies are well tested, and include debt collectors, but others are brand new and more sinister. One of them I noticed when hovering over that logo, ready to check out – some sites have a BNPL set as the default payment method, which means with a single touch, you can get into debt. And without realising you’ve borrowed a penny. Their selling point, the smoothness of use, means it is equally easy to amass debt accidentally. To slide slowly into the water, eventually hitting rock.
 
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yorkie

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tbtc

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I think that there are several different things being conflated here.

Firstly, the oft-repeated "UK fares are more expensive that anywhere else and should come down". Obviously a forum full of railway enthusiasts are going to be in favour of cheaper train travel, it seems a no-brainer - but never takes into account things like the different standards of living between other EU countries (i.e. a train ticket is more expensive in the UK than in Italy/ Spain etc but then so are house prices, so is a pint of beer, so are petrol prices... ), so I'm always a little sceptical. Nobody is going to argue in favour of *higher* fares on here, granted, but I think that sometimes people enjoy making comparisons with fares in countries that have much cheaper standards of living

Secondly, ethics of the "loan" market. I have mixed feelings about some of these companies - they might be parasites or they might be stopping people getting into trouble with dodgier lenders. However horrible Wonga's APR was, it was at least regulated and protected, rather than the murky world of loan sharks. And I do take on board the point about APR not being a great yardstick when assessing the cost of a loan intended to be repaid within a month. Do these companies encourage additional purchases that people can't afford or is it better to spread the cost rather than people making huge sacrifices to be able to buy something up front. We accept that people need mortgages because they can't purchase a house "up front", we accept that people buy season tickets over a year of monthly payments, but we get snobby when other people need loans to afford other things

Thirdly, there have always been companies trying to make money by making people spread purchases over months - when I were a lad it was "catalogues" like Littlewoods/ Grattan - nowadays you can buy clothes much cheaper so there's less need to get garments over six months. Let's not turn this thread into a "your generation vs my generation" debate, especially since nobody is going to come out of it well ("you can't afford to buy train tickets up front" - "well you couldn't afford to buy socks up front"). The point is that there's always been companies trying to encourage you to "buy now, pay later" - there are always going to be products advertised to people who "need" them - it's not a huge surprise that a firm has identified train tickets as a gap in the market to flog financial products. Maybe I've changed my shopping habits over the years, but I can't remember the last time I was offered a "Store Card" at the till, to sign me up to a long term financial commitment - may the rules changed. Odd to think of some of the things that people used to purchase outright/ need a loan for compared to today - "Generation Hire Purchase" needed loans for things that "Generation Wonga" take for granted but the same is true the other way round

That said, I don't like the idea that people need to borrow money to buy something like a train ticket (whether that says more about a generation of people who have very few savings or more about the cost of today's ticket prices, I don't know) - it feels wrong - but then maybe it was ever thus - I doubt my grandparents could have bought a train ticket to London without going to a loan shark etc
 

johnnychips

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I don’t know about Butter, but the business model of Wonga was that they needed people not to pay on time, after which very high rates kicked in. ‘Payday’ loans can be very useful, but only if they are used as such. I can see the odd situation when you might need to buy a rail ticket urgently, but not many.
 

CrispyUK

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I don’t know about Butter, but the business model of Wonga was that they needed people not to pay on time, after which very high rates kicked in. ‘Payday’ loans can be very useful, but only if they are used as such. I can see the odd situation when you might need to buy a rail ticket urgently, but not many.
Wonga wanted you to repay on time, and would take repayment automatically on your payday. High risk for a “reputable” lender of not getting the money back once a payday loan has been defaulted.

What worked really well for Wonga is when a customer became stuck in a vicious dependent circle with them, as an acquaintance of mine did, borrowed £400 for a month, repaid about £525 on payday, paid his other bills, nothing left over so borrowed £400 again to get through the month, repay £525 on payment, rinse and repeat every month.
 

option

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Klarna is 3 instalments, the first of which you pay then, the others are at 30 & 60 days.
Clearpay is 4 fortnightly instalments.
Butter seems to offer a choice, from 2 instalments to 4. They also do an income check & have a credit limit.


Because they are fixed/limited instalments, they may be less risky than a credit card, which only has a minimum repayment amount, & therefore you can carry a debt for a long time.
 

Mike395

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Butter seems to offer a choice, from 2 instalments to 4. They also do an income check & have a credit limit.

For this reason @option mentions above, I personally have less issue ethically with Butter - which works more like a fixed-repayment credit card in this context as it has a known overall credit limit determined by a credit check - than with services like Klarna, which (Whilst I'm sure there's a limit in reality) has no advertised upper spending limit and seems to only do an ID check before lending (or it used to be the case anyway the one time I tried to use it just after it first started - I've not touched Klarna since for this exact reason!).

Incidentally Butter started out as a holiday sales site where you could pay in instalments, it was only after COVID hit and they were forced to diversify to survive that this new offering of being able to pay at any site using their services has arisen.
 

Mcr Warrior

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Incidentally Butter started out as a holiday sales site where you could pay in instalments, it was only after COVID hit and they were forced to diversify to survive that this new offering of being able to pay at any site using their services has arisen.
Traditionally, personal finance for holidays wasn't ever offered for periods beyond 12 months on the basis that customers would undoubtedly be wanting their next year's holiday after then!
 

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