Business World

Shoppers risk building debt by using buy now pay later payments feature

Young shoppers risk building up debts by borrowing money to make buy now pay later repayments, Citizens Advice says.

Half of 18 to 34-year-olds used different types of credit to make the payments, it said.

Although the results were drawn from a survey, the charity said the answers highlighted the issue of people relying on one debt to cover another.

Changes are being made that make some of these debts clearer to lenders.

Buy now pay later has become a commonplace method of payment and credit in recent years. It allows people to pay for purchases in instalments over a short-term fixed-payment schedule, and interest-free.

Some 17 million people in the UK, including 30% of those aged in their 20s, have used it. While popular, it has led to concerns over levels and visibility of debt – particularly as budgets are squeezed by the rising cost of living.

Citizens Advice surveyed 2,288 people who had used buy now pay later during the past 12 months.

It found that most (52%) made repayments from their current account, but 23% used a credit card, 9% used a bank overdraft, and 7% borrowed from friends and family.

One in 10 people in the survey said they did not fully understand how repayments would be set up.

Buy now pay later firms have been under pressure from watchdogs over contract terms and conditions and they information they give to credit agencies.