One-quarter of UK buy now, pay later users hit by late repayment fees

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Almost one-quarter of UK buy now, pay later users have been charged late repayment fees, with younger consumers hit hardest, according to research that points to how people have turned to the unregulated form of credit to cope with rising living costs.

Buy now, pay later (BNPL) products allow shoppers to pay for clothes and food delivery shops, for example, in mainly interest-free weekly or monthly instalments.

The payment method, where users are charged if they repay loans late, has increased in popularity over the past year, in part because it enables users to avoid shelling out on goods in full and upfront. But regulators and consumer groups have voiced concerns over the risk of indebtedness.

Research commissioned by the Centre for Financial Capability (CFC), a UK-based financial education charity, found that 22 per cent of BNPL users have missed one or more repayments in the six months to December 2023.

Of those people, more than one-quarter took a hit on their credit score as a result or were contacted by a debt collection agency, according to the survey.

Young people were most likely to receive late fees, with 34 per cent of users aged 18-34 charged for missing a repayment over the same period.

Although the overall number of BNPL users hit by late fees declined slightly year on year in 2023, the number of people aged 55 or over fined for missing a repayment increased from 7 per cent to 10 per cent.

CFC trustee Jane Goodland said: “As the ongoing cost of living crisis continues to impact the British public, it is apparent that many users are increasingly reliant on these schemes, without fully understanding the risks involved.

“Our polling shows the high usage of BNPL particularly [among] young people, many of whom are facing difficult financial consequences as a result of these schemes,” she added.

The charity found that 21 per cent…