A quarter of young people making Buy Now Pay Later (BNPL) repayments haven’t been able to pay for food, rent or household bills as a result of the commitment, research by Citizens Advice has found.
The research shows 45% of 18 to 34 year olds in the UK have used Buy Now Pay Later in the last 12 months. with half of these committing without realising and one in three went on to regret the decision.
Citizen Advice assays that Buy Now Pay Later is often advertised at online checkouts as an easy way of splitting or delaying payments on items such as clothing or electronics, with incentives like it being ‘interest-free’. But Citizens Advice fears for many people it can be a slippery slope into debt.
Overall, 27% of UK adults have used these firms in the last 12 months, rising to 37% of disabled people and 45% of people with a mental health problem.
The average person was repaying £63 a month. But the research found almost two in five (5.7 million) who’ve used Buy Now Pay Later in the last year didn’t think it was ‘proper borrowing’ and six million didn’t fully understand what they were signing up for.
The charity is warning that four in ten of those who’ve used Buy Now Pay Later in the last 12 months are struggling to repay. It found a quarter of consumers regretted paying using these platforms, with the most common reasons being spending more than they can afford, and paying more than they expected.
Repayments are not the only problem, with three in ten Buy Now Pay Later users saying they’ve been charged a fee they didn’t expect.
In a separate survey of 280 of the charity’s frontline advisers, more than a fifth said they had advised or were aware of people with Buy Now Pay Later issues, with just over two-fifths of these seeing an increase since the start of the pandemic.
Alistair Cromwell, Acting Chief Executive of Citizens Advice, said “Buy Now Pay Later borrowing can be like quicksand – easy to unwittingly slip into and much more difficult to get out of.”
“It shouldn’t be possible for people to sign up for credit without realising, and the fact this is happening so often signals that a drastic overhaul is needed.”
“This industry more than trebled in 2020, and while these products work for many shoppers, the regulator has rightly recognised the potential for harm. It must ensure robust consumer protection keeps pace with changes in how we shop.”