Consumers have racked up £5.6bn on BNPL debt already this year

New research from Credit Karma, consumers have spent over £5.6 billion using buy-now, pay-later (BNPL) services in 2022 so far, with an average spend of £396 per person.

The research also found that BNPL has been a lifeline for 58% of the service users trying to manage the rising cost of living with the number of buy-now, pay-later customers who have seen its use affect their credit score remains high and is on the increase again from last year, up to 45% from 43% in 2021.

Managing repayments is becoming increasingly challenging: 41% of users have missed a repayment, up from just 11% of users last year whilst 61% of BNPL users feel more confident using these services following the announcement that payments will be reported to credit reference agencies. But the full impact of new regulations  will only come into full effect later in 2023

Spending on essentials is set to increase over the summer, with 64% anticipating a rise in the amount they’ll pay toward their bills, and 53% expecting to spend more on food and drink, and others (37%) will find their expenditure rise even for essential household items like cleaning equipment with 52% of BNPL users had to increase the amount they borrow to keep up with the rising cost of living

Commenting on the findings, Ziad El Baba, General Manager at Credit Karma said “As the cost of living continues to soar, consumers are increasingly relying on buy-now, pay-later. While this can be a great tool for spreading out costs over time, it can be an easy way to spend beyond your means, which can lead to a cycle of debt for those who need to use credit cards, overdrafts and loans to make repayments toward their buy now, pay later debts.”