A study by the life and investment company found that the rising cost of living is forcing many families to rely on BNPL more than they would like.

Inflation reached a 10-year high of 5.1% in November and although the Bank of England has raised interest rates to 0.25% to try and quell the rising cost of living, households are still feeling the pinch.

A survey of 2,000 UK adults found that people spend an average of £162 using BNPL payment options.

Nearly four in 10 (37%) Brits said they expect to spend less on Christmas this year than during a typical year before the Covid-19 pandemic. In contrast, only 16% of people plan to spend more, while 43% say it will be about the same.

For most people, the majority of the money they spend will come from their earnings (40%) or from cash they have already saved (38%). But more than one in 10 (11%) say the bulk of their outgoings this Christmas will be money they borrow using overdrafts, credit cards, personal loans or BNPL schemes.

Scottish Friendly also found that almost 9 in 10 (86%) Brits are concerned about the impact of rising prices on their household finances. More than one in three (36%) say it could mean they don’t have enough money left over to pay for some essential costs, such as mortgage payments, rent, bills and food.

If they are hit with a larger than expected bill this winter, two-thirds (67%) of households are worried how they will cope financially.

Kevin Brown, savings specialist at Scottish Friendly, said: “The temptation to keep spending money is hard to resist at Christmas because you want to treat yourself and others around you. There is nothing wrong with this outlook or with spending more than normal, especially after another tough year, but it’s important to keep one eye on what this means for your future finances.

“If you loosen the purse strings too much or borrow more than you can afford, then you may risk putting yourself under undue financial pressure in the weeks and months that follow.

“This is particularly relevant this year as prices are rising faster than they have for 10 years, which means you are going to get far less bang for your buck. If you’re feeling the pinch, try to ensure that when January comes you still have some wiggle room at the end of the month to make ends meet, although we understand this may be extremely difficult for many.

“If you decide to borrow money, be aware that with the Bank of England raising interest rates, repayments will also be slightly higher than previously.”