New research by financial advice service OpenMoney finds almost three fifths (57%) of adults aged 18 to 50 have now used buy now, pay later schemes (BNPL), up from half (49%) last year.
The largest rise in usage has been among 45 to 50-year-olds, where 16% growth in the last year makes it the age group most likely to choose the payment method, with 58% having done so compared to 56% of those aged 18 to 24 - contradicting the belief that it is largely a tool for youngsters.
The survey, among 2,000 UK adults found that the most frequently bought items using BNPL are laptops, phones and other tech items, followed by clothes and holidays.
Two fifths (41%) of respondents said they use it because they can’t afford to pay for an item in one go, double the number who feel it makes financial sense to spread the cost (20%). Among 45 to 50-year-olds, those who use BNPL because they can’t afford an item upfront increased by 20% on last year.
Concerningly, those struggling to pay off their BNPL debts has also risen, from 38% last year to 43% this year and one in three (29%) users have turned to friends and family for help with repayments - an increase of 10% on 2020 figures - while seven percent took out a loan and five percent used a credit card to pay back the money.
Hayley Millhouse, managing director of OpenMoney, comments: “While from a budgeting perspective, spreading the cost of expensive items could make financial sense, it is worrying to see that two-fifths of users struggle to pay off the resulting debt, with many turning to friends and family or other forms of borrowing to make repayments."
The UK's Financial Conduct Authority is to introduce new rules for buy now, pay later firms amid mounting fears of a growing debt burden for cash-strapped shoppers.
Says Millhouse: “Many more people will be using BNPL to finance their Christmas purchases, without necessarily considering how they will make the repayments or fully understanding the consequences if they don’t. One in six of our respondents didn’t even class BNPL as debt. The sooner these schemes are regulated and brought in line with the consumer protections required for other forms of unsecured debt, the better.”