The BNPL De-Generation
• Over half (54%) of Brits use Buy Now, Pay Later services such as Klarna and Clearpay.
• 60% of the UK do not regard money owed to Buy Now Pay Later services as ‘real’ debt.
• 43% admit to indulging in shopping sprees they can’t afford, with an increase to 60% when looking at younger Gen Z and Millennial generations.
• Almost half (46%) of Brits say they don’t know or care whether Buy Now, Pay Later services are FCA regulated.
• The impact of these services is having a huge effect on nationwide mental wellbeing, with 56% of UK revealing being in debt negatively impacts their mental health.
• Freeze Debt, the UK’s leading personal debt solutions app, wants to help Brits combat their financial worries and to hold Buy Now Pay Later schemes to account for irresponsible money lending.
For the first time in eleven years, the UK is officially in recession, with the country’s debt exceeding the size of its economy – a reality we’ve not been faced with since 1963.
The severe economic toll of the coronavirus crisis in the UK is now in full effect, and with the government’s support schemes drawing to a close, further financial hardship awaits the British public. This reality isn’t helped by Buy Now, Pay Later services such as Klarna and Clearpay – schemes that facilitate consumer spending with no due diligence to ensure their money lending is responsible.
In fact, new research from the UK’s leading debt solutions app, Freeze Debt, reveals that over half (54%) of Brits use such services, with 54% of Gen Z and Millennials (21-30 years old) using Buy Now Pay Later payment options up to four times every month (roughly once a week).
Shockingly, 60% of the UK do not regard money owed to Buy Now Pay Later services as ‘real’ debt, with a significant fifth (20%) of Gen Z and Millennials believing it is ‘different to credit card debt’. Additionally, despite the detrimental impact of poor financial habits, almost half (46%) of Brits state they don’t know or care whether such services are FCA regulated.
Irresponsibly encouraging Brits to live beyond their means, almost half (43%) of the UK admit to indulging in shopping sprees they can’t afford – this jumps up to a whopping 60% among younger Gen Z and Millennial generations, who are more likely to use Buy Now Pay Later services.
Freeze Debt also reveals that Buy Now, Pay Later schemes are the second most popular payment option for out of budget purchases, with over half of Brits (52%) signing up to deliberately delay their payments. Beaten only by the majority use of credit cards, which were used by 76% of e-shoppers, and followed by 45% admitting to dipping into their overdraft to afford a pricier purchase - again, highest for those aged 21-30 (56%) and tailed closely by 18-21-year olds (49%).
The top purchases made with ‘Buy Now, Pay Later Schemes’ are:
1. Tech (26%)
2. Travel (21%)
3. Clothes and shoes (19%)
4. Interiors (15%)
5. Gaming (14%)
6. Health and beauty (14%)
7. Sports (11%)
Despite the fact that these services are currently trending, Freeze Debt found that they are having a real impact on the nation’s mental wellbeing. Over half (56%) of Brits confessed that being in debt is having a negative effect on their mental health, often resulting in increased stress, anxiety and sleepless nights. However, whilst the popularity of such services continues to win out, consumers are not blind to the risks, with almost a third (30%) of the UK acknowledging that companies like Klarna and Clearpay help consumers get into debt, and over a quarter (26%) agreeing they encourage irresponsible spending.
Harjit Moore, Freeze Debt’s CEO comments:
“Our research shows that although these Buy Now, Pay Later services look attractive and seem like a good idea at the time, they are having a huge impact on the nation’s mental health by irresponsibly facilitating unsustainable spending habits. We’re seeing this particularly amongst the younger Gen Z and Millennial generations, with younger spenders spiralling into more debt as a result. We're unfortunately seeing the impact of the current pandemic on consumer debt too - for instance, during the month of July, the final month that furlough remained free for employers, organic downloads of Freeze Debt increased by a huge 364%.”
“Unlike these Buy Now Pay Later lenders, at Freeze Debt we put consumers and their needs first, which is why we’re on a mission to help them kickstart their journey to a debt free future. We believe that there should be no shame in asking for help when you’re in debt – debt isn’t and shouldn’t be seen as a dirty word. As someone that’s experienced financial hardship myself, I understand how easy it is to let your finances get out of control – we want to change that, to set consumers on the right path to improved financial and mental wellbeing, whilst changing the narrative around debt in the UK and breaking down the current stigmas.”
Pioneering a completely new way for consumers to find real solutions to their debt problems, Freeze Debt is the only UK-based app designed to resolve personal finance concerns in a way that is simple, convenient and beneficial to both your financial and your mental wellbeing.
Handled completely digitally at your convenience, the app will provide you with a personalised solution tailored specifically to you and your situation – no judgement, no awkward conversations and no hours of terrible hold music. The app cleared just over £12 million worth of its user’s debt in its first year of business and since lockdown was announced on 20th March 2020, Freeze Debt has garnered almost 20m impressions.
Available on iPhone (App store) and Android (Google Play).