Shoppers in Wales tempted into taking on unsustainable debt, study finds

A recent study has revealed that ‘Buy Now, Pay Later’ (BNPL) schemes are apparently tempting shoppers in Wales into taking on unsustainable debt.

The ‘Shop Now, Stress Later’ study conducted by money.co.uk, an online comparison site, found that 78 per cent of consumers in Wales use PayPal credit as their most used payment platform.

Out of the 2,016 respondents aged 18-55, 14 per cent use Klarna and 20 per cent prefer to use ClearPay to spread the cost whilst 22 per cent of shoppers in Wales admitted to taking between six and nine months to pay off credit card debts.

Those aged 18-24 are twice as likely to use BNPL, 52 per cent, then overdraft, 20 per cent, whist 25-34 years olds are the biggest BNPL users.

Over two-thirds have used a BNPL payment scheme like Klarna, Clearpay, or Laybuy and almost a third of UK shoppers, 29 per cent, cite social media as a contributing factor in their decision to use BNPL.

30 per cent of consumers owed between £200 and £300 in ClearPay repayments.

Salman Haqqi, a personal finance expert at money.co.uk, said: “While Buy Now Pay Later schemes, like Zilch, Klarna and Clearpay, are quick and easy to join and seemingly harmless, they are in fact an entry point to debt for many.

“Their quick and easy sign up process, minimal credit check and youthful marketing appeal could be causing shoppers to sign up and spend more than they can afford without understanding the full risk.

“When taking on any sort of debt, it is important that you understand the risks in full otherwise you could end up in a cycle of debt that you can’t get out of. Our recent study shows that those who use Buy Now Pay Later services tend to overspend or purchase more than they otherwise would, as they have the option of breaking the payment into smaller chunks.

“Customers should note all of the terms and conditions and understand completely what they are signing up for to ensure that they are using the service correctly. For shoppers who are confident they can handle the repayments then it might not be a problem, but this is not always the case and there will be those who may not be able to pay off what they spend, and this puts them at risk.”

—–

By Jordan Adams