- Don-Alvin Adegeest |
Research by credit broker platform Money.co.uk shows buy now pay later (BNPL) schemes are tempting shoppers into taking on unsustainable debt.
Young shoppers are taking advantage of deferring payments for small ticket items, with fast fashion retailers Nasty Gal, Boohoo and Pretty Little Thing ranking as the top three brands for BNPL website mentions. Next, Nike, Levi’s, Adidas and Asos are also in the top 10.
The findings show a fifth of UK shoppers admit to spending more than what they can afford and admitting BNPL was an opportunity to purchase now and “worry about it later.”
The average debt to BNPL platforms is 176.05 pounds, and takes eight months to repay.
How are retailers getting British shoppers hooked on ‘buy now pay later’?
Taking a list of the UK’s most popular retail brands from YouGov, Money.co.uk scored each website on the number of BNPL mentions on product pages, checkout pages, and on the website homepage to reveal which brands are pushing Klarna, Clearpay, and Laybuy the most.
Salman Haqqi, a personal finance expert at money.co.uk said: “While Buy Now Pay Later schemes, like Zilch, Klarna and Clearpay, are quick and easy to join and seemingly harmless, they are in fact an entry point to debt for many.
“Their quick and easy sign-up process, minimal credit check, and youthful marketing appeal could be causing shoppers to sign up and spend more than they can afford without understanding the full risk.
“Our recent study shows that those who use Buy Now Pay Later services tend to overspend or purchase more than they otherwise would, as they have the option of breaking the payment into smaller chunks.
“Customers should note all of the terms and conditions and understand completely what they are signing up for to ensure that they are using the service correctly. For shoppers who are confident they can handle the repayments then it might not be a problem, but this is not always the case and there will be those who may not be able to pay off what they spend, and this puts them at risk”.
For further information please go to www.money.co.uk; Image via Pexels