Buy Now Pay Later (BNPL) loans appear to be growing in popularity at the moment because of the cost of living crisis, according to a new study investigating the impact that the situation is having on workers.

Carried out by professional services firm Barnett Waddingham, the study found that 38 per cent of their employees have used BNPL in the past, while an additional 15 per cent have plans in place to use it in the future, This Is Money reports (1).

While you may be considering BNPL as an option at the moment, it’s worth noting that these products often come with very high interest costs if you’re late with a repayment or miss one altogether, so it’s important to ensure the risks and benefits are fully considered..

The surveytudy also found that 30 per cent of those asked said they had started using their credit cards more, while 17 per cent had opted to take out a bank loan. And 12 per cent had used payday loans to help them bridge the financial gap.

Off the back of these findings, the company issued a warning that this surge in cheap credit could have a long-term impact on the UK’s economic recovery, with increasingly vulnerable people struggling with rising debt levels at a time when wage growth is low.

Partner at Barnett Waddingham Julia Turney was quoted by the news source as saying: “It’s clear people are closely watching their budgets but, if nothing changes soon, our data shows a growing number of employees will be turning to debt – if they haven’t already.

While there is a role for credit as part of a healthy financial plan, it is never the answer to a personal debt crisis. Not only could this risk an employee’s future financial resilience, but it could fuel a cost of living comedown nationally, stunting consumer confidence and holding back the economic recovery.”

BNPL is a good solution if you are feeling the pinch where your finances are concerned, but bear in mind that payments can quickly mount up and put even more pressure on your funds. 

It may be the case that with certain BNPL lenders no interest is charged or late fees added,but debts can still pile up quite quickly – and this could impact your ability to pay the rest of your bills.

If you are struggling with debt at the moment because of cost of living challenges, get in touch with us today to see how we can help with flexible debt solutions at the moment.

References:
1. https://www.thisismoney.co.uk/money/bills/article-11853877/Third-UK-workers-used-buy-pay-later-cost-living-crisis.html