Fourfold increase in BNPL debts

In addition to this, since March 2021, there’s been a 49% increase in the number of customers with BNPL debts included in their debt solutions. As well as this, there’s been a 15% rise in the average BNPL debt value per customer - from an average of £342 in March 2021 to £392 in November 2021 - with some customers having up to 14 BNPL loans included in their debt solution. 

There’s also a difference in the way men and women use BNPL. Male borrowers tend to owe more than women - £462 compared with £324 - and they’re slightly older - 36.5 compared with 35. 

As for where this service is used, online shopping is still overwhelming the main way customers have accessed it - with 96% of BNPL borrowing taking place when at the checkout on an online retailer. 

In terms of the types of purchases using the loan, 60% said they’d purchased clothing, 47% for home furnishings, 30% on entertainment and technology, and seven percent on cosmetics and skincare. 

And, while most consumers realised they were taking credit, 60% said “it didn’t really feel like borrowing”, with 73% saying the lender did not take into account their ability to afford the repayment. 

In its research, Financial Wellness Group asked customers whether BNPL debts had contributed to their decision to take debt advice. 23% said their BNPL debts were a big factor, 50% said they were a contributory factor, and 27% said they weren’t a huge part of their decision - with 74% saying they now regret using BNPL credit. 

Commenting on the findings, the debt advice company’s chief operating officer Deborah Ware said the firm remains concerned that BNPL lenders don’t do enough to check whether customers can afford the expected repayments. 

She added: “And because BNPL lenders don’t always run a hard credit check, they aren’t able to see what other BNPL credit the customer has been applying for, which can contribute to customers having multiple outstanding BNPL debts.

“We’ve raised the credit search issue with major BNPL providers, and we know that they are in discussion with the Credit Reference Agencies (CRA). The CRA’s monthly update cycle, and the way that each credit search reduces somebody’s credit-worthiness, causes issues for BNPL lenders – this needs to be addressed as part of the FCA’s credit information market study.

“It is vital that appropriate affordability checks are in place, and that customers are fully aware of the terms and conditions of the loan that they are taking. Very often these products are targeted at younger consumers at the point of purchase, with little time to really consider the pros and cons of ‘paying later’.”