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Debt solutions for 'buy now, pay later' debts rise 300 percent

Debt solutions including arrears to ’buy now, pay later’ providers have jumped by more than 300 percent in the past six months, according to findings from the Financial Wellness Group.

The average debt to buy now pay later providers, such as Klarna, is around £250 and customers will typically have more than one BNPL account, and in some cases up to 10.

 

Last year, the Financial Conduct Authority (FCA) introduced rules restricting the backdated interest charged on cash already paid by the customer.

 

Sebrina McCullough, head of external relations at Gregory Pennington, part of the Financial Wellness Group said: “We have seen a marked rise in customers with buy now pay later accounts amongst their debts over the past six months. This is a worrying trend: while these point-of-sale loans may seem convenient, whether they are taken online or in store, it is vital that appropriate affordability checks are in place, and that customers are fully aware of the terms and conditions of the loan that they are taking.

 

“Very often these products are targeted at younger consumers at the point of purchase, with little time to really consider the pros and cons of paying later.”

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