Consumers aged 18 to 24 are more likely to use buy now, pay later (BNPL) schemes (54%) than a credit card (49%), according to a new survey from money.co.uk.
It comes after the news that BNPL transactions are set to exceed 1.5 billion transactions by 2026. The research also found that 19% of shoppers admit BNPL is a way to “buy now, worry later”.
Additionally, the comparison website’s research for 2021 - which consisted of a survey of 2,016 people aged between 18 and 55 - discovered that 16% believe BNPL schemes led them to purchase more than they could afford. Alongside this, the researchers found that on average BNPL platforms expect payment after 49 days but the average consumer said it takes 261 days to pay - making it an extra 186 days in debt. Also, on average BNPL users owe £244.37 and take nine months to make repayments.
In contrast to its 2020 report, money.co.uk found mental health has overtaken finances as the biggest current concern in the lives of shoppers, with 35% admitting they were worried about their mental wellbeing. Additionally, 8% said they were concerned about their credit score indicating that BNPL users may not fully understand the implications of borrowing through payment spreading schemes.
James Andrews, money.co.uk’s senior personal finance editor, said: “Our research shows that BNPL providers’ youthful marketing appeal and use of social media influencers continue to encourage shoppers to sign up and potentially spend more than they can realistically afford.
“As with any forms of debt, it’s important to fully understand the risks associated before committing yourself to any contract of agreement. A failure to do so could easily spiral into a cycle of debt you cannot get out of.
“Customers tempted to use BNPL schemes should take note of all terms and conditions and make sure they understand how much they’ll be repaying and when. Shoppers who make their repayments on time are unlikely to run into any issues, however impulse spenders and those purchasing more than they can reasonably afford may be putting themselves at risk.”
StepChange’s head of media Sue Anderson added: “While we wait for the proposals on how the BNPL regulation will be implemented, we’d very much like to see retailers and providers of these services putting in place clearer communication and stronger consumer protections - though we believe these cannot be left to chance, and need regulatory underpinning.
“It would be a good start to improve cancellation policies, and also not make BNPL an overpromoted option at checkout. Consumers must be put in full control of the services they use, and not put in a situation where they inadvertently find themselves acquiring debt that may cause them difficulty.”