More than two in five Buy Now Pay Later (BNPL) customers borrowed money to make repayments, Citizens Advice has found. The types of borrowing included overdrafts, borrowing from friends and family, loans and payday loans. The most popular was credit cards (26%).
Younger shoppers were most likely to borrow to pay off BNPL purchases. The charity found 51% of 18-34 year olds borrowed money to pay off BNPL debt, compared to 39% of 35-54 year olds and 24% of over-55s.
These latest findings come as the BNPL market continues its meteoric growth. But the sector remains unregulated.
Citizens Advice is calling for regulation to protect customers, including market-wide affordability checks and clearer information at checkouts. Worryingly, the charity found more than one in 10 Buy Now Pay Later customers didn’t fully understand how the repayments would be set up.
Millie Harris, a Debt Adviser at Citizens Advice East Devon, said:
“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.
“It’s heartbreaking 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.
“What scares me most is how easily people can slip into using Buy Now Pay Later. They come to rely on it much more quickly than other forms of credit. It’s just a few clicks at a checkout. Too often that means people don’t realise how serious it is; that it is credit and there are consequences if they don’t repay it.”
Dame Clare Moriarty, Chief Executive of Citizens Advice, said:
“Shoppers are piling borrowing on top of borrowing, and sinking into ever more desperate situations that can feel impossible to escape from.
“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.”
