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Millions turn to buy now pay later deals to help with Christmas spending

Millions turn to buy now pay later deals to help with Christmas spending
Your Money
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Your Money

Buy now pay later (BNPL) deals are increasingly likely to be used this Christmas to ease the pressure of festive spending, a leading charity has found.

New research by Citizens Advice has showed that a staggering 15.1 million people, just over one in four UK adults, said that they would expect to use a deal to delay paying for the cost of Christmas.

This rises to more than half of parents with primary school-aged children.

How does buy now pay later work?

BNPL allows shoppers to purchase goods and take possession of them straight away, but pay for them later.

For example, you might pay in weekly, fortnightly or monthly instalments; or in full, 14 or 30 days after the purchase.

BNPL is sometimes known as ‘point-of-sale’ credit. This is because it is offered at the physical or online checkout.

Christmas crunch

Citizens advice also discovered that many are turning to BNPL just to cover essential expenses. The charity’s analysis found 11% of respondents used the product to pay for groceries, a figure that jumped to 35% for people who regularly use BNPL.

Regulation stalls

Two years ago, the Government was committed to regulating the BNPL sector and made it a priority issue, but work in this area has now stalled, the charity said.

Citizens Advice warned that regulation delays are putting consumers at risk of being exposed to unmanageable levels of debt and even bailiff action.

This is because BNPL lending does not require any affordability checks, unlike other credit options.

Citizens Advice research revealed that just over one in five BNPL users have missed or made a late BNPL payment over the past year. As a result, one in ten of those have had to face a visit by an enforcement agency or bailiff.

The charity is now calling on the Government to bring forward BNPL regulations.

Urgent action needed

Dame Clare Moriarty, the chief executive of Citizens Advice, said: “The number of people turning to BNPL, and falling into debt as a result, underlines the urgent need for regulation.

“With so many households already on the financial ropes, BNPL borrowing for extra Christmas costs risks delivering the knockout blow. This should set off alarm bells for the Government, whose dithering on regulation of the sector has gone on for too long.

“As the use of this form of credit soars, the impact of its lack of regulation becomes impossible to ignore. Consumers are being failed and as a result could see a 2024 plagued with unmanageable debt, poor credit, and bailiffs knocking at their door.

“The Government must act on its almost three-year-old pledge and bring the BNPL market into line urgently.”

Related: Guide: Everything you need to know about Buy Now, Pay Later