Some shoppers struggling to make Christmas payments

A fifth (20%) of shoppers who used buy now, pay later (BNPL) schemes over Christmas will be unable to meet their repayments without borrowing more money, a survey suggests.

The average amount spent by BNPL consumers during Christmas 2020 was £211, slightly up from £201 in 2019, comparethemarket. com found. The highest average spend was by those aged 45 to 54, at £277.

More than two-fifths (44%) of UK adults who used a BNPL scheme to fund their Christmas shopping are now concerned about their ability to repay, the research found.

Concerns have been mounting about some consumers taking on unsustainable debts. But it has also been argued that, when used responsibly, such schemes can help prevent people turning to highercost forms of credit to finance purchases.

Comparethemarket.com found 36% of BNPL users saw it as a way to spread the cost over a longer timeframe.

However, the findings also suggest that schemes may encourage unnecessary spending, as nearly a third (32%) felt it made them spend more than they usually would and more than twofifths (44%) bought more extravagant gifts.

James Padmore, head of money, comparethemarket. com said: “When used responsibly, buy now, pay later schemes can be an effective and alternative way to spread out the payments of large purchases.

“It’s easy to see why it’s popular at a time like Christmas.However, the ‘I’ll deal with it later’ attitude to using this type of financing may mean that some people are now really feeling the strain.

“Our findings show that this has unfortunately caught up with some customers.”