By Amelia Isaacs on Friday 29 July 2022
Almost two thirds of Brits expect the cost of their bills to rise over the summer.
As the cost of living crisis in the UK continues to deepen, the number of Brits turning to ‘buy now, pay later’ (BNPL) as a temporary solution continues to rise.
BNPL has been a “lifeline” for 58 per cent of service users, according to new Credit Karma research, and 52 per cent of existing BNPL customers have upped the amount they are borrowing.
These numbers are rising as 61 per cent of BNPL users say they feel more confident using the services following the announcement that payments will be reported to credit reference agencies.
But the full impact of new regulations will only come into full effect later next year.
“Until buy-now, pay-later is fully regulated and incorporated into all credit reporting, consumers should be aware they won’t be recognised as credit-responsible for using these methods of borrowing, as they are for using overdrafts and credit cards,” Credit Karma general manager Ziad El Baba said.
“Our research has also shown that BNPL consumers can sometimes lose track of what they owe or miss payments, which can still impact their credit rating negatively.”
Just 11 per cent of users missed a repayment last year, compared to 41 per cent so far this year.
The credit reference service analysed data from 122,000 open banking customers, and also found that many customers are turning to BNPL instead of traditional overdrafts, with regular overdraft use dropping from 39 per cent to 27 per cent of customers.
Meanwhile, the majority of users expect to see their spending increase over the course of the summer.
64 per cent of people expect a rise in bills, 53 per cent expect to spend more on food and drink and 37 per cent even predict a rise in spending on essential household items.