A quarter of young people making Buy Now Pay Later repayments haven’t been able to pay for food, rent or bills as a result, Citizens Advice has found

A quarter of young people making Buy Now Pay Later repayments haven’t been able to pay for food, rent or bills as a result, Citizens Advice has found. 

New research from Citizens Advice shows 45% of 18 to 34 year olds in the UK have used Buy Now Pay Later in the last 12 months. Alarmingly, half of these did it without realising and one in three went on to regret it.

Buy Now Pay Later is often advertised at online checkouts as an easy way of splitting or delaying payments on items such as clothing or electronics, with incentives like it being ‘interest-free’. But Citizens Advice fears for many people it can be a slippery slope into debt. 

Overall, 27% of UK adults have used these firms in the last 12 months, rising to 37% of disabled people and 45% of people with a mental health problem. 

The average person was repaying £63 a month. But Citizens Advice found almost two in five (5.7 million) who’ve used Buy Now Pay Later in the last year didn’t think it was ‘proper borrowing’ and six million didn’t fully understand what they were signing up for. 

The charity is warning that four in 10 of those who’ve used Buy Now Pay Later in the last 12 months are struggling to repay. It found a quarter of consumers regretted paying using these platforms, with the most common reasons being spending more than they can afford, and paying more than they expected.

And repayments are not the only problem, with three in 10 Buy Now Pay Later users saying they’ve been charged a fee they didn’t expect.

In a separate survey of 280 of the charity’s frontline advisers, more than a fifth said they had advised or were aware of people with Buy Now Pay Later issues, with just over two fifths of these seeing an increase since the start of the pandemic.

‘I’ve been barraged with calls, emails and letters from a debt collector - all for buying some clothes online’

Sharonjit, 32, bought £600 worth of clothes and used a Buy Now Pay Later firm to pay in installments. She didn’t receive the goods and so cancelled her payment to the firm while she waited for the issue to be resolved by the retailer. 

She said: “The whole thing has been so stressful. I’m constantly on edge. I’ve just been barraged with calls, emails and letters from a debt collector - all for buying some clothes online.

“The firm said they were referring me on to someone and I had no idea it was a debt collector. I had no idea Buy Now Pay Later could impact my credit score.

“I’ve never had issues shopping this way before. But this time it’s like as soon as something went wrong they’ve washed their hands of me.”

Citizens Advice believes Buy Now Pay Later firms must overhaul their checkout processes, to ensure shoppers aren’t encouraged to spend more than they can afford, and improve affordability checks. Customers must also be treated fairly if they are struggling to repay, and be able to escalate problems to the Financial Ombudsman Service. 

The charity will share its research with the Financial Conduct Authority, as it decides how Buy Now Pay Later firms will be regulated. 

Alistair Cromwell, Acting Chief Executive of Citizens Advice, said: 

“Buy Now Pay Later borrowing can be like quicksand - easy to unwittingly slip into and much more difficult to get out of. 

“It shouldn’t be possible for people to sign up for credit without realising, and the fact this is happening so often signals that a drastic overhaul is needed. 

“This industry more than trebled in 2020, and while these products work for many shoppers, the regulator has rightly recognised the potential for harm. It must ensure robust consumer protection keeps pace with changes in how we shop.”

Notes to editors

1. Opinium carried out a nationally representative survey of 10,000 adults in the UK  between 28 January and 14 February 2021. 2,700 respondents had used Buy Now Pay Later (BNPL) in the past 12 months. Questions respondents were asked included: 

1. How many times in the last 12 months have you purchased anything using a Buy Now Pay Later payment method?’ 45% of 18 to 34 year olds and 27% of all adults said they have at least once. 

2. On average how much are you paying every month in payments for Buy Now Pay Later products? The average was £63 a month.

3. Have you ever used a Buy Now Pay Later service without realising it? 52% of 18 to 34 year olds and 39% of adults who’d used BNPL in the last 12 months said yes. 

4. Have you ever regretted using Buy Now Pay Later to purchase an item? 35% of 18 to 34 year olds and 26% of adults who’d used BNPL in the last 12 months said yes. 

5. To what extent do you agree or disagree with the following statements about Buy Now Pay Later services? 40% Strongly agree or agree Buy Now Pay Later isn’t really “proper” borrowing. 

6. Have you ever struggled to meet a Buy Now Pay Later repayment?' 41% said they have at least once

7. Have you been unable to pay for any of the following because you were making payments for a Buy Now Pay Later product? Food, phone bill, energy bill, internet bill, water bill, council tax, rent, essential toiletries e.g. nappies or soap, other repayments.  24% of 18 to 34 year olds who’d used Buy Now Pay Later in the last 12 months said yes to one of the above. 

2. 21% of 280 advisers said they had seen a Buy Now Pay Later issue in the latest Network Panel survey in December 2020. Of these, 41% of these said they had seen an increase in this issue since the start of the pandemic. 

3. Collection practices vary by firm.

4. The report Buy Now… Pain Later? is available on request. 

5. Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.

6. Our network of charities offers impartial advice online, over the phone, and in person, for free. 

7. We helped 2.8 million people face to face, over the phone, by email and webchat in 2019-20. And we had 34.5 million visits to our website. For full service statistics see our monthly publication Advice trends.

8. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,600 service outlets across England and Wales.

9. Citizens Advice is the largest provider of free, multi-channel debt advice. Providing that help gives Citizens Advice unique insight into the types of debts people struggle with.

10. You can get consumer advice from the Citizens Advice consumer service on 0808 223 1133 or 0808 223 1144 for Welsh language speakers.