Buy Now, Pay Later Deals Pushing Borrowers Deeper into Debt

As many as two in five buy now, pay later (BNPL) customers across the UK have used some form of debt to make their repayments on their deals, according to a new piece of research.

There are concerns that BNPL plans are routinely having the effect of prolonging or worsening the debt problems of a significant and growing number of British consumers.

“Most of the people I speak to who are using Buy Now Pay Later live off overdrafts and credit cards, so are using these for repayments. It’s just relying on one debt to pay off another debt,” explained Millie Harris, a debt advisor working for Citizens Advice.

“It’s heart-breaking to see parents who can’t afford their children’s clothes or shoes, turning to Buy Now Pay Later, thinking it’s doing them a favour. In reality it’s just more debt and more creditors, on top of what they’re already facing.”

Research looking at the latest trends within the BNPL market carried out by Citizens Advice recently found that younger generations are more likely to use other debts to pay off their BNPL arrears than are their older counterparts.

The figures suggest that a small majority (51 per cent) of BNPL users aged between 18 and 31 go further into the red to make their BNPL repayments, compared to 39 per cent of those aged between 35 and 54.

The popularity of BNPL arrangements has grown hugely in recent years and the overall scale of the market in the UK has expanded quite spectacularly in that time.

However, debt help campaigners and charities like Citizens Advice want to see the market being regulated more stringently so that consumers with problem debts are better protected.

Dame Clare Moriarty, Citizens Advice’s chief executive, has said: “The spiral of debt from Buy Now Pay Later to credit cards, loans and even payday lenders shows it’s not a risk-free alternative.

“Buy Now Pay Later is part of the credit industry and must urgently be regulated as such.”

If you live anywhere in Scotland and you are worried about your personal debts then Scotland Debt Solutions can help. Contact us directly to arrange a FREE and confidential consultation.