Buy now pay later purchases up by a third during lockdown
More than a quarter (27%) of people who used a BNPL scheme in the past 12 months say that they did so because they couldn’t afford the purchase at the time and wanted to delay the payment.
More than one in five (23%) said it was because BNPL better suited their financial needs than other forms of debt, such as a credit card.
The Compare the Market study looked at BNPL usage in December 2019 versus October this year.
It found that 15% of respondents now use BNPL schemes for all purchases when the option is available, compared with only 4% at the end of last year.
Just under a fifth (19%) use this type of credit for most of their purchases, up from 11% before the pandemic.
The research also found that the amount of money people spend per transaction via this type of financing has also increased.
The average amount spent in a single BNPL purchase has risen by £100, from £190 pre-lockdown to £290 now.
More than a fifth (22%) of respondents said they now spend between £201 and £500 on average. A breakdown by gender showed that 28% of men spent this amount compared to only 18% of women.
However, the research also showed that shoppers are placing more scrutiny on managing their money.
Almost one in 10 (9%) have missed a BNPL payment in the past 12 months, down four percentage points from December 2020. However, 13% of people felt that BNPL schemes did make them spend more than they would have done otherwise.
Young people are the demographic most reliant on BNPL schemes. More than half (54%) of 18 to 24-year-olds say they have used BNPL more since the pandemic began, with nearly a fifth (18%) having missed at least one repayment in the past 12 months. This is double (9%) the proportion of those who had in December.
John Crossley, head of money at Compare the Market, said: “Household finances have been significantly squeezed this year. As a result of the pandemic, more people have turned to online shopping, contributing to a marked uptick in the use of buy now pay later schemes that has continued beyond the national lockdown.
“When used responsibly, BNPL schemes can be a cost-effective way to manage finances. However, as people use this type of credit more frequently and for larger payments, it is probable that some people will spend beyond their means at a time of unprecedented economic uncertainty.
“Black Friday deals are already being promoted. If you need to take on credit, make sure you do your research on all the options available to you and find the product which best suits your needs.”
A report by the Money and Mental Health Policy Institute earlier this week blamed BNPL schemes for exacerbating mental health problems.