A growing number of individuals in the UK are seeking assistance with debts accrued through buy now, pay later (BNPL) services, leading to concerns about financial strain among families. Abi, a single mother from Sheffield, has shared her experience of becoming indebted through such services, using them for essential purchases like groceries and school uniforms. She reports feeling trapped in a cycle of debt, currently owing approximately £3,000.
According to debt charity Stepchange, about 1.6 million people in the UK utilized BNPL options to manage household expenses in recent months. Five prominent debt support organizations have noted an increase in cases related to BNPL debt. For instance, Money Wellness reported a 44% rise in assistance provided for these debts in the last year, while Citizens Advice indicated a 48% annual increase in BNPL-related inquiries.
BNPL services allow consumers to spread their payments over time, but advisors warn that missed payments can lead to mounting debts. While these companies argue they have safeguards and support systems in place, critics point out that soft credit checks can result in loans being granted without a full understanding of a borrower’s financial circumstances.
Starting in 2024, new regulations will require BNPL providers to implement stricter affordability checks. Nevertheless, current trends show that many are using these services unsustainably. For example, Abi has been forced to rely on multiple BNPL applications to afford basic necessities, often incurring additional fees from deferred payments.
In contrast, not all users have faced debt issues. Danielle, another single mother, reports using BNPL responsibly to manage her budget without incurring significant debt. Although many consumers have benefitted from these services, the ease of access raises concern about potential risks, especially for those facing unforeseen financial challenges.
Source: https://www.bbc.com/news/articles/cql94yr4y7vo?at_medium=RSS&at_campaign=rss