45% of BNPL customers fall behind on payments

Despite concerns around lack of regulation, BNPL providers acquired 1.6 million new users in 2021 with the debt pile set to grow even more this Christmas.

The total number of active UK customers has reached 11.6m - equivalent to 22% of the adult population - according to new research by Credit Karma.

According to the credit broker’s research, BNPL customers’ outstanding balances average £538 each. This means the total level of debt in the UK currently stands at £4.14bn.

Of those surveyed by Credit Karma, nearly half (45%) of customers admitted to falling behind on payments.

What’s more, this debt is set to swell as 31% plan to use BNPL this Christmas.

Knock on debt effect

Those falling behind are experiencing more than just debt. Nearly a third (31%) say they have seen their credit score drop as a result, while a similar number believe that they have been rejected for a mortgage or other borrowing after missing BNPL repayments.

The report highlighted the lack of transparency around BNPL, with 40% of respondents saying it’s too easy to buy using the service without realising they were entering into a credit agreement.

Almost half (48%) of BNPL purchases are made on nonessential items, such as electronics, cosmetics, or holidays.