One in five Buy Now Pay Later customers using it for essential items

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Almost two million Buy Now Pay Later customers are now using it for essential items, new research suggests.

  • Over 10 million use BNPL and half have a bill they haven’t yet paid off.
  • Half of those owe more than £100.
  • BNPL is changing how people shop and rising prices have increased its usage.
  • MaPS urges anyone who’s struggling to visit its MoneyHelper serviceOpens in a new window

A survey of 2,507 UK adults using BNPL, carried out by the Behavioural Insights Team and the Money Pensions Service (MaPS), showed that one in five (19%) had used it for essentials.

This included groceries (11%), toiletries and hygiene (8%), household bills (5%) and fuel (4%).

There are an estimated 10.1 million BNPL customers in the UK and MaPS says that although it can be very useful, people need to consider it as carefully as any other credit product and use it in the right way.

The poll, part of a new report called Buy Now Pay Later: a review of the market, also revealed that over half of users (55%) currently have an outstanding payment, while 33% have at least two. Of those with payments outstanding, more than half (55%) owed more than £100, while one in seven (14%) owed over £500.

BNPL is also changing how people shop, with two thirds (69%) saying they have used it even though they’d originally intended to pay for the item in full. Meanwhile, 44% had checked for BNPL whilst shopping and 38% had spent more than they planned to because it was available.

Respondents broadly reacted positively to BNPL, with 82% finding it easy to understand and 76% saying it was easy to manage and pay off.

However, 32% had faced an issue managing their spending, with 14% of customers missing a payment and 14% charged a late fee.

Asked what had caused the issue, ‘prioritising other borrowing repayments’ (34%) and ‘not knowing a payment was due’ (32%) were among the top responses. ‘Not knowing they would be charged a late fee’ (22%) and ‘borrowing too much’ (21%) also featured prominently.

One in ten had taken money from savings (13%) or used a credit card (10%) to make a repayment.

Responding to the findings, MaPS says that BNPL could be a useful and effective short term credit option. However, it says people should consider how they will repay it, especially as you may be approved for it even if you can’t afford the repayments.

It also warned that if it’s the wrong option for someone’s circumstances, such as when it becomes long term borrowing, the situation can quickly become difficult and may affect their credit score.

As a result, MaPS is urging anyone struggling with BNPL to use its free, independent MoneyHelper service.

Jackie Spencer, Head of Money and Pensions Policy at the Money and Pensions Service, said: 

“Buy Now Pay Later can be a useful way to spread the cost of purchases and it often provides a real lifeline to those needing short term borrowing for essentials. However, like all credit products, it’s an important decision and everyone should take time to decide whether it’s right for their circumstances.

“This research shows that many people are using it when they hadn’t intended to and spending more because it was available. It’s absolutely crucial that they make sure they can afford the repayments and don’t risk turning a short term product into long term debt.

“If you’re struggling with Buy Now Pay Later, or any credit repayments, I’d urge you to seek help today via our MoneyHelper service. You don’t have to go through this alone.”

Ellie Lugt, Senior Advisor at the Behavioural Insights Team said:

“Buy Now Pay Later products are useful for many people to smooth their spending, but customers can be supported to better manage their repayments. Providers and retailers may be able to support customers by sending timely payment reminders and displaying simple disclosure notices, so that customers are clear on what they are signing up for.”

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Notes to editors

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