Citizens’ advice warns of the danger of debt Buy now, pay later

2:39 PM 9 June 2022

More than two in five Buy Now Pay Later (BNPL) customers are forced to borrow money to make repayments, according to a new study.

Citizens Advice has warned that BNPL’s “skyrocketing growth” will drive more and more people into debt, with young people most affected.

The consumer charity has called for more market regulation as people grapple with mounting debt amid the cost of living crisis.

Citizens Advice called for more regulation of the Buy Now Pay Later market
– Credit: PA Archives/Press Association Images

Amy Griffiths, acting chief executive of Citizens Advice Thetford and Diss branch, told BBC Radio Norfolk that while people can afford “one or two” BNPL payments, it can quickly “spin out of control”.

“We are seeing an increasing number of young people in their 20s and 30s coming to us for help over the past few months.

“Buy Now Pay Later was primarily tied to online fashion retailers, but now there’s an option to use it for supermarket purchases, which in the current climate is a concern.

“It’s so easy to get accepted for the BNPL program because there’s usually no credit check on it.

“While people can afford one or two of these, it can quickly spiral out of control. Our concern is the lack of regulation.”

Young buyers were the most likely to borrow to repay BNPL purchases. The charity found that 51% of 18-34 year olds had borrowed money to pay off BNPL debt, compared to 39% of 35-54 year olds and 24% of over 55s.

Types of borrowing included overdrafts, borrowing from friends and family, loans, and payday loans. The most popular was credit cards (26pc).

Dame Clare Moriarty, National Managing Director of Citizens Advice, added: “Buyers are piling on more borrowing and hoarding themselves into increasingly desperate situations from which it may seem impossible to escape.

“The spiral of debt from Buy Now Pay Later to credit cards, loans and even payday lenders shows that this is not a risk-free alternative. Buy Now Pay Later is part of the credit industry and urgently needs to be regulated as such.

The cost of living crisis is having a significant impact across the county and four in 10 families are now struggling to pay their bills.

Comments are closed.