More than one in seven buy-now-pay-later users have been charged a late fee

New research has shown more than one in seven people (14%) who use buy-now-pay-later (BNPL) to do online shopping have missed a payment and been charged a late fee.

The reasons for missing a payment included:

• prioritising other debts (34%)
• not realising a payment was due (32%)
• not knowing about late fees (22%)
• borrowing too much (21%)

Paying for essentials

The survey by the Money and Pensions Service (MaPS) found one in five (19%) of BNPL customers had used it to cover the cost of essentials, including:

• groceries (11%)
• toiletries and cleaning products (8%)
• household bills (5%)
• fuel (4%)

Other findings

The survey also found:

• 38% spent more than planned because BNPL was available
• 32% of users struggle to manage their spending
• 13% had dipped into savings to make a repayment
• 10% had used a credit card to make a repayment

The benefits

On the other hand:

• 82% said BNPL was easy to understand
• 76% said it was easy to manage and pay off

Make sure it’s right for you

Jackie Spencer from MaPS said:

“Buy Now Pay Later… often provides a real lifeline to those needing short-term borrowing for essentials. However, like all credit products, it’s an important decision and everyone should take time to decide whether it’s right for their circumstances.”