40% Buy Now Pay Later Shoppers Borrow Money To Pay Off The Debt – Cryptovibes.com – Daily Cryptocurrency and FX News

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Citizens Advice says shoppers ‘piling borrowing on top of borrowing’ by repaying with credit cards.

More than two in five current buy now pay later (BNPL) shoppers depended on credit cards or other forms of borrowing to settle their debts, the charity Citizens Advice has said. It said the data showed that shoppers are “piling borrowing on top of borrowing” and emphasized the dire need for BNPL to be monitored.

On June 6, Apple announced a BNPL feature for iPhones, which will initially be rolled out in the US in or around September and could make it to the UK a couple of months later.

BNPL allows shoppers to spread out payments for goods with no interest or charges – unless they are not able to repay on time, at which point some firms charge late fees. Mostly, the cost is divided into monthly, fortnightly, or weekly installments.

Two of the largest BNPL firms operating in the UK are Clearpay and Klarna, and other major players include Zilch and Laybuy.

This form of credit has benefited from rapid growth during the coronavirus pandemic, particularly among under-30s and those with limited finances. However, the rate of growth is believed to have eased during the past few months as the cost of living crisis has caused people to cut down on non-essential spending.

A survey was conducted for Citizens Advice in March involving 2,288 people in the UK who had used BNPL in the last 12 months.

More than two in five respondents (42%) said they used borrowing of some sort to fund their repayments, with credit cards by far the most attractive option. Others included borrowing from friends and family, overdrafts, personal loans, and payday loans.

Younger shoppers were the most expected to borrow to pay back BNPL purchases. The charity found that 51% of 18- to 34-year-olds borrowed money to pay back BNPL debts.

The government has said BNPL is to be monitored by the Financial Conduct Authority (FCA), though this is not likely to happen until later in the year or next year. Citizens Advice wants this regulation to be inclusive of affordability checks by all participating firms, and direct information at online checkouts.

Millie Harris, a debt adviser at Citizens Advice East Devon, said resorting to credit cards and other types of borrowing for repayments was “just relying on one debt to pay off another debt”.



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