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'Buy now, pay later' users struggling to pay back debts, Compare the Market reveals

Wednesday 3 February 2021 12:19 CET | News

Compare the Market has revealed that a fifth of 'Buy Now, Pay Later' (BNPL) users are unable to pay back Christmas spending without taking on more debt.

According to YourMoney.com, the price comparison site found that 20% of adults who used a BNPL programme at Christmas will be unable to meet repayments without borrowing more money. Besides, the average amount spent by BNPL users at Christmas was GBP 211, slightly up from GBP 201 in 2019.

BNPL payment options, such as Klarna and Laybuy, are becoming an increasingly common alternative method of financing purchases, especially when shopping online. However, the study founds that BNPL services encouraged unnecessary spending, with almost a third (32%) of those questioned spending more than they usually would, and more than 44% buying more extravagant gifts.

These results don't come as any surprise, as lately BNPL has been criticised for potentially encouraging people to spend more than they had planned and getting into debts that they cannot comfortably pay back. Consequently, the UK’s Government has announced that 'buy now, pay later' (BNPL) credit agreements will be regulated by the Financial Conduct Authority (FCA)


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Keywords: Compare the Market, Buy Now, pay later, BNPL, instalment payments, FCA, debt
Categories: Payments & Commerce | Online Payments
Countries: World
This article is part of category

Payments & Commerce