Nearly one in 10 ‘have used buy now pay later schemes for essentials’

Nearly one in 10 people have used buy now pay later (BNPL) schemes to cover essentials, according to a new report from Hargreaves Lansdown.

The research reveals that one in 16 people, 6%, have bought groceries using BNPL and the same proportion have used it to buy a takeaway.

BNPL schemes can help people to avoid having to pay interest on their borrowing, while still being able to spread paying the money back over a period of time.

However there have been concerns about people potentially taking on debt which they will not comfortably be able to pay back.

READ MORE: New customers, increased spend and more orders: Why retailers should build an effective BNPL strategy

The cost-of-living crisis may be making it harder for some households to pay for goods in one go.

“As prices soar, we’re also starting to fall back on (BNPL) to cover the cost of the essentials,” Hargreaves Lansdown senior personal finance analyst Sarah Coles said.

“Borrowing to pay for essentials feels like a solution in the short term, but, by spreading the cost, it means pushing up your expenses for months, making it even harder to keep on top of your finances.”

The UK Government plans to change the law to bring some forms of unregulated BNPL products into Financial Conduct Authority (FCA) regulation.

The news comes after Klarna recently announced that it will start to report the use of BNPL products to UK credit reference agencies from June, to protect customers and provide the industry with greater visibility of BNPL use, helping to improve affordability assessments.

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