Reports of rising debts as more of us turn to Buy-Now-Pay-Later

There’s a warning that Buy-Now-Pay-Later spending is driving a huge rise in debt across the country.

Many of us have been turning to BNPL more, possibly due to the rising cost of living.

But because BNPL is not yet regulated there’s a risk the money we owe could spiral and leave us struggling to put food on the table.

What is Buy-Now-Pay-Later?

BNPL took off during lockdown, when it was a popular way of paying for clothing – especially among younger people. But figures showed a rise in use among people of all ages last year.

Now charity Citizens Advice has warned that it’s being used by lots of us to cover the cost of the basics like bills and rent.

In October 2022, BNPL firm Klarna signed a deal with Deliveroo to let customers pay for food deliveries in instalments.

One branch of Citizens Advice said debt inquiries had gone up from 4,000 a month last April to 7,000 a month now.

How can we protect ourselves?

BNPL means we can break up the cost of purchases and avoid interest and fees if we make the required payments on time.

But if we don’t keep on top of the repayments we’ll face a fee. It could also affect our credit score. In a recent survey, a third of people said they’d used BNPL to buy things that were outside their budget.

Back in summer, Quids in! reported on warnings that some BNPL companies weren’t always being clear with us about the fees we could face. To stay one step ahead we need to be on the lookout for companies like Klarna or PayPal offering us the chance to spread out payments.

Before signing up, we need to think carefully about repayments and whether there are other options for us.

If debt’s already a problem, don’t panic. But don’t delay – seek help! There’s free advice and support out there.

Agencies like StepChange or the National Debtline (0808 808 4000) can help us to work out a payment plan and find ways to manage the debt. And if we live near a Quids in! centre we can get support with managing our finances more generally.

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