Ticking Time Bomb of Buy Now Pay Later: Over 3 Million UK Households Owe £2.7 Billion in ‘Shadow Credit’ Boom

Ticking Time Bomb of Buy Now Pay Later: Over 3 Million UK Households Owe £2.7 Billion in ‘Shadow Credit’ Boom


A recent analysis conducted by economists at the Bank of England has revealed a concerning trend in the UK’s borrowing landscape.

More than three million households in the UK are currently grappling with a collective debt of £2.7 billion due to their participation in the ‘buy now, pay later’ (BNPL) borrowing phenomenon.

This eye-opening revelation sheds light on the scope of this unregulated practice, raising concerns about its potential negative consequences.

The analysis indicates that individuals aged between 25 and 34 are the primary users of BNPL services, highlighting a significant generational trend.

Demographics and Concerns

The analysis delved further into the demographics of BNPL users, indicating that younger individuals and renters are more likely to engage in this type of borrowing.


Both of these groups often exhibit less financial resilience, suggesting a higher susceptibility to financial challenges.

Moreover, the study found that a considerable percentage—68%—of BNPL users express concerns about their borrowing practices.

This apprehension significantly exceeds the 45% of other borrowers who report similar worries.

Additionally, BNPL users are more prone to falling behind on repayments by two months or more, with 21% admitting to having been in arrears, compared to just 6% of traditional borrowers.

Complex Landscape and Lack of Regulation

The BNPL landscape is multifaceted, involving a variety of providers and lending models.


Start-up fintech companies often offer BNPL services without charging interest on repayments; instead, they impose fees on retailers.

Established lenders, on the other hand, provide BNPL products that do involve interest and are subject to regulation.

This variety in the market’s offerings has led to a lack of clear regulation and oversight, contributing to concerns about consumer protection.

One major player in the BNPL market, Klarna, has reported a substantial customer base in the UK, indicating the widespread adoption of these services.

Call for Regulation and Awareness

As BNPL continues to gain popularity, consumer advocates and policymakers are sounding the alarm.


Concerns have been raised regarding the lack of clear information provided by some providers about the potential risks associated with BNPL usage, such as the possibility of falling into debt or incurring significant late fees due to missed payments.

The absence of comprehensive understanding among consumers about the potential pitfalls of BNPL agreements is a significant concern.

In light of these findings, there is growing pressure for regulatory measures to be implemented to safeguard consumers from the potential negative consequences of BNPL borrowing.

Labour MP Stella Creasy, a proponent of tighter regulation, emphasizes the importance of addressing these concerns before the situation escalates further.

While the government’s stance on regulating BNPL services remains a topic of debate, the mounting evidence of financial vulnerability among users underscores the need for prompt and effective action.


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