A third of UK ‘buy now, pay later’ users say they can’t handle payments

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Nearly a third of shoppers using Buy Now, Pay Later credit say that paying off loans has become “unsustainable” as the cost-of-living crisis has pushed them into a spiral of debt, new research shows. Is.

Research has found consumers are spending more on the controversial form of credit, with shoppers using BNPL now making an average of 4.8 purchases – almost double the 2.6 purchases seen in February. The average BNPL user’s outstanding balance is currently £254.

Barclays Bank and debt organization Stepchange said it was “worrying” that 30% of Brits use BNPL to buy goods, and almost a third (31%) of them said lending had landed them in problem debt. was.

The study also found that lending to retailers offering BNPL is expected to account for almost a quarter of their sales by the end of this year.

BNPL allows buyers to pay for items like clothing and furniture without interest or fees – until they don’t pay back on time, at which point some companies charge late fees. Typically, the cost is broken down into weekly, fortnightly, or monthly installments. Lenders typically make their money through commissions from retailers.

The new form of credit has seen explosive growth during the pandemic. There were reports that this had slowed as people cut non-essential spending, but Richard Lane, Stepchange’s director of foreign affairs, said: “There is growing evidence that BNPLs are only used to buy discretionary items can.” is not done for it. Fashion but also essentials such as groceries. ,

The multi-billion dollar sector, dominated in the UK by the likes of Klarna, Clearpay and LeBeau, is set to be regulated by the Financial Conduct Authority. However, it has been hinted that the new rules may not come into force until 2024, prompting activists like Martin Lewis to express dismay at the slow pace of progress.

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Research shows that the rising cost of living has a direct impact on the popularity of BNPL, with over a third (36%) of consumers saying it has become more attractive since inflation and rising energy costs.

Four hundred retail decision-makers were surveyed for the study, and those offering BNPL estimated it would have 22.1% of sales by the end of 2022, compared to 18.7% now.

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