More people turn to Buy Now, Pay Later to fund Christmas
Strained household finances and the highest level of inflation for decades have resulted in fewer than a quarter (24%) of people saying they will comfortably be able to afford Christmas this year, compared with nearly half (45%) last year, according to a survey of more than 2,000 people for the StepChange Debt Charity.
A further one in four people (25%) say they expect they will struggle to afford Christmas, while three in ten (30%) say they will have to cut back on their normal expenses in order to fund their festive spending. And 2% of people say they won’t celebrate Christmas at all this year due to cost.
Buy Now, Pay Later on the rise
The new polling also shows that more people will be turning to credit options like credit cards and Buy Now, Pay Later (BNPL) to fund their festive spending.
Interestingly, the use of BNPL is notably on the rise with two in five (40%) of those who expect to borrow intending to use it, up sharply from just over a quarter (27%) for Christmas in 2021. Intended BNPL usage is higher among women (45%) than men (32%).
BNPL is a form of credit allowing customers to spread the cost of purchases over a number of payments without paying interest. However, where customers fail to make a payment or pay late, providers can and do impose penalty charges and interest.
Back in the summer, YourMoney.com reported that the City watchdog The Financial Conduct Authority (FCA) had issued a stark warning to BNPL firms which did not flag the danger of consumers falling into debt if repayments are missed.
Consider the repayments post-Christmas
Richard Lane, Director of External Affairs at StepChange Debt Charity, said: “While it can be a special time of year to celebrate with family and friends, Christmas can also be a financial strain, with many feeling pressure to spend beyond what they can afford.
“The reality is with no sign of inflation easing, and energy bills set to rise further into 2023, taking out unaffordable credit over the festive season may only lead to a debt hangover in the New Year and beyond which may prove difficult to overcome.
“If you’re thinking about using credit cards or Buy Now, Pay Later to fund your festive spending, do pause and consider whether you will be in a position to comfortably meet the repayments. If you’re worried about your finances, you don’t need to suffer in silence – and you don’t need to wait until January.”
Free, confidential debt advice is available 24/7 using StepChange’s online debt advice service, or by telephone during opening hours on 0800 138 1111.