‘Buy now, pay later’ deals see young adults struggling with household bills

A QUARTER of young adults making “buy now, pay later” repayments have struggled to pay for food, rent or other bills as a result, Citizens Advice has found.

The charity said that 24 per cent of 18 to 34-year-olds using such schemes in the past 12 months admitted they had been unable to pay for food, a phone bill, an energy bill, an internet bill, a water bill, council tax, rent, essential toiletries or make other repayments.

Citizens Advice found 45% of 18 to 34-year-olds had used buy now, pay later schemes, which spread payments, in the past 12 months. Around half (52%) did so without realising and one in three (35%) went on to regret it.

Buy now, pay later schemes are often advertised at online checkouts as an easy way of splitting or delaying payments on items such as clothing or electronics, with incentives being “interest-free”.

But Citizens Advice fears that, for many, such schemes can be a slippery slope into debt.

Overall, 27% of UK adults have used these firms in the last 12 months, rising to 37% of disabled people and 45% of people with a mental health problem.

The average person was repaying £63 a month, but Citizens Advice found that around two in five people who had used the schemes in the past year did not think it was “proper borrowing”.

The charity also said four in 10 (41%) people who had used buy now, pay later facilities in the past 12 months had been struggling to repay.

A quarter of consumers regretted paying using these platforms, with the most common reasons being spending more than they could afford and paying more than they expected.

In a separate survey of 280 of the charity’s frontline advisers, more than one-fifth (21%) said they had advised or were aware of people with buy now, pay later issues, with just over two-fifths (41%) of these seeing an increase since the start of the coronavirus pandemic.

Citizens Advice heard from a 32-year-old who bought £600 worth of clothes and used a buy now, pay later firm to pay in instalments. She did not receive the goods and cancelled her payment to the firm.

She said: “The whole thing has been so stressful. I’ve just been barraged with calls, emails and letters from a debt collector – all for buying some clothes online.

“The firm said they were referring me on to someone and I had no idea it was a debt collector. I had no idea buy now, pay later could impact my credit score.

“I’ve never had issues shopping this way before. But this time it’s like as soon as something went wrong they’ve washed their hands of me.”

Citizens Advice believes buy now, pay later firms must overhaul their checkout processes, to ensure shoppers are not encouraged to spend more than they can afford.

The charity will share its research with the Financial Conduct Authority, as it decides how buy now, pay later firms will be regulated.