With rising living costs and societal pressure to keep up with the latest trends, the popularity of Buy Now, Pay Later (BNPL) schemes continues to surge.
New data reveals that over 50% of UK adults – around 26 million people – have used a BNPL service in 2024, a 36% increase from the previous year.
While 38% of Brits claim they have never used a BNPL scheme and do not plan to, the significant rise is raising concerns about the financial health of consumers.
MoneyPlus, a leading debt help and advice service, has highlighted the growing financial strain caused by BNPL usage. In January 2024, 41% of new MoneyPlus customers were already in debt due to BNPL schemes.
With the year still ongoing, MoneyPlus reports that BNPL-related debt among its customers has skyrocketed by 915%, and this figure is expected to grow as the BNPL market is predicted to double by 2028.
Gen Z and millennials are the heaviest users of BNPL services, with 70% admitting to having used them. However, Generation X is also a significant demographic, with 52% acknowledging they have used BNPL at some point.
MoneyPlus identified several factors contributing to the rise in BNPL usage:
- Ease of access: The convenience of BNPL schemes allows consumers to purchase items with just a few clicks, often beyond their immediate financial means.
- Lack of understanding: Many consumers fail to fully comprehend that BNPL services are credit agreements, which may lead to unplanned debt.
- Financial vulnerability: BNPL appeals to those with limited cash flow, but it can lead to unmanageable debt.
- Multiple payments: Accumulating BNPL purchases can quickly lead to mounting debt if repayments are missed.
- Economic pressures: With the cost-of-living crisis, people are using BNPL to spread out payments without interest, further fueling the trend.
Despite the risks, BNPL services offer advantages like no credit checks and immediate access to products.
Jonathan Mills, CCO of MoneyPlus Advice, emphasized the importance of consumer awareness: “While BNPL provides convenience, it can lead to serious debt if not managed properly. Consumers must assess whether they can truly afford to use BNPL, and seek advice if they are struggling with repayments to prevent further financial trouble.”
