The cost of living crisis continues to put financial strain on many households across the UK. Alongside the rising cost of energy, other items such as groceries are reaching the highest rate seen since the 2008 financial crash with shop prices rising a further 5.1% in August 2022. To help offset the cost of living, many families have chosen to use Buy Now Pay Later and other forms of credit.
What is Buy Now Pay Later?
Buy Now Pay Later (BNPL) is a form of short term financing, which allows a user to spread the cost of a purchase over a set time period. Many BNPL providers offer this credit at 0% interest, making it an attractive option especially if you are struggling to pay for the essentials.
Increased use of Buy Now Pay Later During the Cost of Living Crisis
As Britons continue to struggle paying for essential items, many credit offers have begun teaming with supermarkets, or offering their credit services on food and drink items.
For example, Zilch is advertising a buy now pay later deal in partnership with Iceland and online grocery store Flava is offering interest free credit on various items across the store. Even take away retailers such as Dominos can be bought on credit.
All this has led to a steady increase in the use of these interest free credit options. A recent study by Step Change showed that 4.4 million UK households were struggling to keep up with bills and to help cover the costs, borrowed a total £13 billion in efforts to tide them over to payday. This report also found that 36% of consumers found BNPL more attractive due to the rising inflation.
The Dangers Of Buy Now Pay Later
Although on the surface, 0% interest credit options seem like the perfect solution, they come with their own dangers and it is important to understand these before using them.
Buy now pay later is a form of credit and borrowing. Some BNPL users are unaware that this is a form of borrowing and not being able to keep up with repayments will land them in debt.
A third of UK BNPL users have reported that their repayments have become unmanageable, and has left them in problem debt. Should you miss a repayment, it is likely you will be charged with hefty late-payment fees. After a missed payment, you may also find that interest is added to the remaining balance.
Each BNPL provider differs in their approach to late payments and you must make sure you have read and understand the fineprint before agreeing to continue.
A recent legislation change earlier this year also means that BNPL will be available to see by other finance lenders and could hurt your chances of getting further credit in the future.
Free Debt Advice For Buy Now Pay Later
If, like many in the UK, you have turned to buy now, pay later options and have found yourself in debt because of it, we are here to help.
Our online debt advice tool can offer free debt advice completely online, with no need for a phone call or face to face meeting.