Brits forced to borrow their way through financial crisis

brokeInflation might be edging down but the UK cost of living crisis is continuing unabated, with almost half (48%) of Brits having either used buy now, pay later (BNPL) services or considering doing so in the near future, as consumers are forced to borrow their way through the crisis.

In what will be revealing figures for many brand owners, a study by personal finance comparison site shows 19 million adults in the UK (36%) have already used BNPL services, and a further 13% intend to use them in the future. Meanwhile, 42% of those who have used the schemes, did so for the first time during 2022, highlighting the financial woes many are facing.

The figures show BNPL platforms are generally more popular among younger generations but that older generations are also beginning to sign up.

Some 55% of millennials (aged 24-42) say they have used a BNPL service, closely followed by Gen Z (aged 18-23) on 43%, and Gen X (aged 43-54) on 35%, Baby Boomers (aged 55-73) dip to 19% and the over 74s come in at 8%.

Even so, 50% of those aged 74+ who have used BNPL services have done so for the first time during 2022, emphasises the impact that the financial crisis is having on this age group.

A further 3% also said they plan to start using these services in the future, which could result in 1 in 10 of those aged 74+ using BNPL.

Baby boomers appear to be following the same pattern, with 48% of those who have used BNPL services having done so for the first time during 2022. Gen X was next with 42%, followed by 41% of millennials and 34% of Gen Z.

When asked about what they were using these services to pay for, the study found that a significant number were using BNPL for essential items.

Some 17% said they used it to pay bills such as energy and water. A further 16% had used BNPL to pay for essential travel, and 15% had used it to pay for essential food. The most popular essential item was clothing, on 32%.

Even so, the largest number of consumers (41%) still use of BNPL services for non-essential items. editor-in-chief Liz Edwards said: “The findings highlight the extent to which many Brits are struggling to keep up with their day-to-day costs, with such a large proportion turning to BNPL platforms to cover essential spending amid spiralling food costs and rising mortgage rates.

“Previously these services have largely been used by younger generations, but these findings show that this is beginning to change, as older generations struggle to navigate the cost of living crisis, and as awareness of BNPL grows.

“There have been recent murmurs that the UK government might be backtracking on its plans to regulate BNPL, despite the lack of proper information customers get upfront, the lottery of late fees, the lack of proper affordability checks and the lack of access to the Financial Ombudsman.

“If you’re considering using BNPL, it’s so important to be aware of what you’re signing up for. This type of borrowing has the potential to be harmful if you can’t afford the repayments, so I urge any consumers who are thinking of using these services to consider whether they can really afford to pay the money back before using them.”

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