Black Friday warning as millions still unaware of debt risks from BNPL services

Despite BNPL’s surge in usage among shoppers, especially younger demographics,16 million Brits do not realise they can sink into debt through such point-of-sale lending.

The research from Creditspring exposes alarming knowledge gaps regarding BNPL’s core workings. A full third of adults believe BNPL purchases cannot lead to debt, with over half of 18-24-year-olds clinging to that misconception. Comparable proportions across age groups also fail to grasp that BNPL constitutes a form of borrowing similar to credit cards.

This widespread lack of understanding comes amid projections that BNPL spending will spike over Black Friday and the holiday season. With households stretched thin by the cost of living crisis, deal-seeking shoppers appear primed to lean on BNPL financing to fund purchases despite the risks.

Creditspring CEO Neil Kadagathur argues that BNPL providers need to urgently improve communication around products that can quickly spiral borrowers into debt. Far too many users fall behind on repayments or drain savings to cover costs without realizing the potential consequences.

Kadagathur contends that "the onus has to be on lenders to ensure that borrowers understand the risks and support them before they rack up huge debt piles." But with BNPL regulation still lagging, firms have little incentive to be more transparent about hidden fees and other pitfalls.

In the meantime, financial experts advise shoppers to carefully weigh BNPL’s convenience against long-term impacts on their financial health. Uninformed use of such services over the holidays could saddle many with lasting debt despite the allure of interest-free deals