UK consumers face a £4bn purchase now pay later festive hangover

Britons will owe billions of kilos within the new yr after utilizing purchase now, pay later (BNPL) to fund Christmas.

Analysts estimate that consumers will spend nearly £4billion with BNPL lenders over the festive season, which might be 8.8 per cent greater than final yr.

It will take the whole quantity spent in 2023 to £17billion, up greater than 1 / 4 in comparison with 2022.

Amid fears that this may result in a painful debt hangover in January, campaigners say consumers ‘need to think hard before using BNPL’.

Pressure is mounting on ministers to hurry up new guidelines for the business, three years after plans to manage had been first introduced.

Christmas prices: Analysts estimate that consumers will spend nearly £4bn with purchase now pay later lenders over the festive season, 8.8% greater than final yr

BNPL permits shoppers to buy with an settlement to pay inside a sure interval or in instalments.

Providers have claimed that it gives shoppers selection and is a accountable type of lending.

But critics argue the unregulated business can lure individuals in a spiral of debt as affordability checks should not powerful sufficient.

Helen Ganney, from the debt charity Christians Against Poverty, mentioned Christmas generally is a ‘really stressful, anxious time’ for hard-up households.

She mentioned: ‘Buy now, pay later can seem an attractive way to afford all the things we’d like to purchase at Christmas – however the “later” half comes round shortly and can should be paid again.

It is worrying that these merchandise should not at present regulated by the Financial Conduct Authority, as different lenders are.’

According to the most recent analysis from Adobe Analytics, shoppers are set to spend £3.7billion by way of companies like Klarna, Laybuy and Clearpay over the festive interval.

That will take the whole to £17.2billion throughout 2023 – up 26 per cent on final yr.

Debt recommendation organisation Money Wellness mentioned shoppers had been recurrently asking for assist with 20 or extra BNPL payments.

‘The pressure to get the best presents, cook a huge meal or throw the perfect party is real,’ mentioned Money Wellness exterior relations boss Sebrina McCullough.

‘But shoppers need to think hard before using BNPL about whether they can afford to make the repayments in the new year. 

We’re actually gearing as much as see an increase within the variety of individuals in search of free debt assist in January and February on account of BNPL spending this Christmas.’

Debt charity Step Change, which mentioned January will likely be its busiest interval, warned households will really feel the pinch this yr ‘as the cost-of-living crisis bites’.

Spokesman Richard Lane mentioned promoting ‘implies a happy Christmas involves spending money’ however added: ‘Your loved ones wouldn’t need you to undergo financially after the festive is over.’

Ministers promised to manage the business in 2021 and printed draft laws earlier this yr.

The new guidelines, together with more durable promoting restrictions and stronger rights for shoppers, have but to be launched.