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26 Jan 2023

The rapid growth in the use of Buy Now Pay Later (BNPL) services risks becoming the UK's next 'credit trap' scandal, a loan provider has warned.

25 Jan 2023

Under the banner of CONEBI, the Confederation of the European Bicycle Industry,15 national bicycle industry associations and 68 companies have become signatories to a self-commitment to prevent...

23 Jan 2023

As Glasgow gears up to host the 2023 UCI Cycling World Championships, community groups have been given a share of more than £160,000 to boost bike use in the city.

23 Jan 2023

British Cycling has published new research, which shows the rising popularity of off-road e-bikes and electric mountain bikes (e-MTB’s) and highlights the need for improvements to cycling...

18 Jan 2023

The article reports that, in 2021, Halfords saw its annual cycling sales double and stocks dry up. However, by the middle of 2022, it says, warning signs were appearing as inflation and supply...

16 Jan 2023

Weston-super-Mare seems to be one town in the UK bucking the national trend, with new shops opening and businesses reporting an increase in trade, according to a report by Bristol Live.

12 Jan 2023

New banknotes featuring King Charles are to enter circulation by mid-2024. The King’s portrait will appear on four polymer banknotes (£5, £10, £20, and £50)....

12 Jan 2023

The government has announced it is to scale back support for businesses and their energy bills after warning that the current level of help was too expensive.

10 Jan 2023

With retail finance schemes remaining a preferable route for retailers to boost sales during recession than the financial hit required by heavy product discounting, the Association of Cycle...

10 Jan 2023

Portugal has become the first EU country to cut VAT on bicycle purchases this year, from 23% to 6%.

“Buy Now Pay Later” could be UK's next 'credit trap' scandal, loan provider warns

Posted on in Business News , Cycles News

The rapid growth in the use of Buy Now Pay Later (BNPL) services risks becoming the UK's next 'credit trap' scandal, a loan provider has warned.

BNPL hands

A report from Creditspring said a lack of education and awareness of the potential consequences of high-cost borrowing meant 'poorly financially informed customers' were increasingly relying on BNPL as a 'crutch' ahead of payday.

BNPL allows customers to split the cost of purchases into instalments, often with no interest or charges unless they fail to pay back on time. The warning comes at a time when credit reporting agency Equifax is saying that a third of adults have now used buy now, pay later (BNPL), with 4.1 million people using this type of credit for the first time in 2022. It found that use of BNPL hit an all-time high in the lead up to Christmas 2022, and it predicts that use will continue to increase in 2023.

Creditspring has joined charities and politicians in sounding the alarm over the unregulated industry, with its report noting that a third of people did not know that using BNPL could put them in debt.

The report noted that 13% of those surveyed used BNPL 'because their friends do', a figure that rose to 23% among the under-25s.

'Unawareness of the cost and consequences – combined with peer group encouragement and ease of access – means that BNPL usage is likely to increase,' the report said.

The report said that 24 per cent of people said they had struggled to pay back BNPL loans, up from 15 per cent last year, with 17 per cent missing at least one payment.

The latest BNPL Barometer from Equifax analysed data from more than 23,000 people who hold current accounts, and 2,000 consumer interviews.

It found that one in eight (13%) people have used BNPL to pay for a meal or takeaway, and a similar number (12%) have used it to spread the cost of everyday consumables such as groceries or toiletries.
The Equifax research found that one in three (34%) Brits have now used BNPL services, up from 26% in November 2021. This suggests that 4.1 million people chose to use the payment method for the first time in 2022.

Equifax’s study found that more than one in 10 (11%) people expected to use BNPL for their Christmas shopping, and a similar number (12%) said they would use it in the January sales.

Creditspring said users were also risking their long-term ability to borrow if their credit score was affected.
It also warned the lack of regulation meant ill-informed customers could sign up for multiple BNPL services at once, increasing the risk that they will default on loans.

Creditspring called on lenders to 'ensure borrowers fully understand the risks.' It proposed removing 'confusing' terminology to make the true cost of borrowing clear.

The ACT has previously raised concerns about the improper regulation of BNPL providers and the risks that this brings to potential customers.
If you would like to talk to someone from the ACT about how we can help find the right finance provider for you please get in touch.

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