‘Buy now, pay later’ services have boomed in recent times as they allow shoppers to buy goods on credit and pay for them after an initial interest-free period or in instalments.

A quarter of Brits are estimated to have used the payment method to fund Christmas spending in the biggest year for online shopping amid the coronavirus pandemic.

According to credit report provider Credit Karma, those who used ‘buy now, pay later’ services face an average bill of £170 – nearly 40% of their total Christmas spending.

Nearly half of those who relied on this method are aged under 35, with men more likely than women to have used the payment option.

Further, its research revealed those living in London, the South East and North East of England were also more likely to have used this option than average.

Credit Karma warned that even for those who borrow sensibly via the schemes, it’s unlikely they’ll see the benefit reflected in their credit scores.

It said that unlike regulated methods of borrowing, buy now, pay later products don’t benefit the borrower’s credit score for paying back debt within the interest free period (usually 30 days).

This means customers who rely more heavily on these schemes than regulated agreements might struggle to prove to financial institutions that they’re responsible borrowers when it comes to longer term lending like personal loans, mortgages or car finance.

Akansha Nath, head of partnerships at Credit Karma, said: “Buy now, pay later schemes have seen a meteoric rise, but in doing so have attracted attention for being unregulated and potentially risky for consumers who don’t fully understand how the schemes work.

“At Credit Karma, we believe people should be rewarded for the sensible management of borrowing, as this helps them make financial progress towards important things like mortgages or competitively-priced car finance. Until this changes, borrowers are risking debt without any credit given for handling it.”

Last month, the Advertising Standards Authority (ASA) clamped down on buy now, pay later advertising, stating that they should make it clear to shoppers that they’re offering a form of credit.