Introduction
Courtney Cross, a 26-year-old mother, is among the growing number of people in the UK who are using buy now, pay later (BNPL) schemes for essential items like groceries and nappies. As the cost of living continues to rise, more individuals are turning to these schemes as a convenient solution. However, financial experts warn of the risks associated with using BNPL services and encourage consumers to explore alternative options.
The rising trend of using BNPL for essentials
A recent study by the Money and Pensions Service (MaPS) revealed that nearly two million shoppers who use BNPL are now using it for essential items such as groceries. Of those households using BNPL for essentials, 11% are buying food and 8% are purchasing toiletries and hygiene products. The Financial Conduct Authority (FCA) has also noted a significant increase in the use of BNPL services, with 27% of UK adults using them to buy something in the past six months.
When BNPL becomes a necessity
Courtney, who works as a hairdresser and is a mother to 18-month-old Wren, explains that the rising prices of groceries, petrol, and energy bills have pushed her to rely on BNPL schemes. She admits to using these services multiple times a week to buy essential items like milk, sausages, and bread. While BNPL provides a temporary solution, Courtney acknowledges that it can lead to a spiral of debt if not managed properly.
The dangers of relying on BNPL
Financial experts warn against the risks of using BNPL schemes for everyday expenses. Energy and debt advice groups express concern over this growing trend, highlighting that it reflects the increasing desperation of individuals and families struggling to cover basic expenses. Citizens Advice and other financial experts recommend exploring cheaper borrowing and budgeting options, such as arranging an overdraft with a bank or seeking support from local councils and charities. Falling behind on BNPL payments can also negatively impact one's credit score.
Tips for managing finances
Money experts suggest creating a budget to help individuals cope with their financial obligations. This involves keeping track of income, expenses, and payment due dates, as well as setting aside a portion of savings for emergencies and special occasions like birthdays and Christmas. It is important to use a realistic budget and review it regularly. Additionally, consumers should be aware that certain BNPL lenders may conduct credit checks, which can affect their credit records.
It is crucial for individuals to explore alternative options and seek financial advice to avoid falling into a cycle of debt. BNPL schemes may offer convenience, but they come with risks that should not be taken lightly.
Did you miss our previous article…
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