Buy Now Pay Later (BNPL) is offered at many checkouts now as a method of [delaying] payment. What seems like a practical solution has led to a rise in some people using the service to pay for their weekly shopping as a temporary solution.
According to a new report, one in twelve Brits use BNPL to pay for shopping and everyday essentials. The stats have also shown people in debt and those on benefits such as Universal Credit are more likely to use BNPL. This suggests this payment method is being given to people who potentially can’t afford repayments
Once upon a time, the local corner shop or pub may have offered people an account or to “pay on the tick”. Although this seems similar in theory, the repercussions of missing even small payments can be huge.
Therefore, when people simply can’t repay their account, debt collection agencies are brought on. Your credit score is also impacted and the debt can spiral. Thus, the simplicity of paying later doesn’t take into account the sizeable repercussions. Should lending really be this easy?
They are targeting vulnerable people
BNPL services such as Klarna, Clearpay and Laybuy have experienced a boom in usage, particularly those in need. For example, parents purchasing baby clothes before their benefit payments came into their bank accounts. Meanwhile, some companies have actually been contacting vulnerable customers in order to tempt them to raise their credit limit by hundreds or even thousands of pounds.
Younger customers are also being targeted with these higher credit limits. Citizens Advice has been calling for an urgent investigation and control over the sector, including affordability checks. They also want BNPL firms to be held accountable. To do this, they suggest firms need to be more transparent about using their service, and the risks included. These risk mainly being inability to pay back loans, resulting in debt.
MoneyMagpie’s Jasmine Birtles Says:
“When people get to the point where they’re using BNPL or credit cards to pay for day to day bills and even for food, this is an indication that there is a serious problem in their finances. Using these methods is kicking the can down the road and it means that people are really not coping at all. Anyone who finds themselves doing this needs to go to one of the free debt advice agencies immediately and get help from them.”
Where can we go for free debt advice?
Follow this link where we talk you through everything you need to do, who you need to contact and ways you can cope with getting out of debt today. If you have been stung by a buy now pay later sceme then please send your stories to email@example.com