More than a quarter of adults in the UK will use buy now, pay later to help with festive spending, research suggests, with the proportion rising to more than half of parents with young children.
The survey for Citizens Advice also found 11% of respondents used such credit schemes to pay for groceries, a proportion that rose to 35% for regular BNPL users.
The charity said it was braced for a new year of debt support as millions turned to companies that allow customers to stagger payments. Over the past year, there had been a 67% increase in people seeking help from Citizens Advice because they were struggling to pay back money owed from BNPL spending.
Of the 2,156 adults surveyed, 28% said they were likely to use delayed repayment services to help with festive spending, which rose to 56% of parents with primary school-age children.
One in five (21%) BNPL users said they had missed or made a late payment in the past 12 months, with 10% of that group going on to be visited by an enforcement agency or bailiff as a result.
About a third of people who used staggered repayment services also borrowed money to repay an instalment due in the past month, meaning their initial debt was leading to further debt
Dame Clare Moriarty, the chief executive of Citizens Advice, said there was an urgent need for regulation She added: “With so many households already on the financial ropes, buy now, pay later borrowing for extra Christmas costs risks delivering the knockout blow.”
Moriarty said the findings should “set off alarm bells for the government, whose dithering on regulation of the sector has gone on for too long”.
The government committed to regulating the sector in 2021 as a matter of priority but work has stalled.
Citizens Advice warns these continued delays are putting already stretched consumers at risk of being exposed to unmanageable levels of debt and even bailiff action. The charity said this was because BNPL lending did not require any affordability checks unlike other credit options.
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Moriarty said: “Consumers are being failed and as a result could see 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.”
A Treasury spokesperson said: “When used appropriately, buy now, pay later can be a useful, interest-free way for consumers to manage their finances.
“We must ensure that regulation of these products is proportionate to ensure borrowers are protected without unduly restricting access. We will publish a response to our recent consultation once it is finalised.”
