Buy now, pay later 42% of Gen Z in Britain used it last year

New research suggests nearly half of 16-24-year-olds in Britain used buy-now-pay-later services last year to help spread the cost of expensive fashion items and nifty tech equipment.

BNPL services enable shoppers to pay for goods in installments after purchasing an item, often using informal credit agreements and use has doubled in the past few years.

More often than not, retailers team up with a big player like Klarna, Clearpay or Laybuy with ease of payment, and this has resulted in 42% of Gen Z now using a BNPL provider in 2021.

Roughly the same number said the services are “great at helping them afford the items they want to buy the most,” according to a nationwide survey of 4,000 by Student Beans.

Shopping fix: Of those young adults who used BNPL providers last year, 57% used pay-post services to update their wardrobe and spend on fashion items

This is in stark contrast to their parents, two-thirds of whom say they can be risky because they encourage young people to spend more than they can afford.

Grandparents were found to be more pessimistic, with three-quarters expressing the same fears.

The research found that young people use BNPL in all of their purchasing methods.

Of those young people who used BNPL providers last year, 57 percent used pay-as-you-go services to update their wardrobe, 47 percent used them to buy technology and 27 percent used them for health and beauty products.

The research also found that 14 percent used it to buy food and drink.

BNPL can work well as a budget aid if used responsibly, but the ease with which people can sign up for many BNPL deals without proving they can afford it, said Andrew Hager, personal finance expert and founder of MoneyComms, remains a huge cause for interest.

“It is concerning that BNPL is being used for necessities like food and drink which makes you think that some of these borrowers may actually be in financial difficulty if they are borrowing to put food on the table.”

At present, the sector is dominated by three major players, Klarna, Clearpay and Laybuy – Klarna being the largest with over 13 million shoppers spending £2.7 billion annually in the UK.

Although attractive at first, if used irresponsibly, some worry that BNPL schemes could lead to debt buildup or even a negative impact on credit ratings.

Up to 30 percent of BNPL users claimed to have used it to pay for purchases they couldn’t afford, according to research by comparison site Finder.

“My advice to young consumers is not to buy something just because you only have to put up a third of the cost up front,” Hager says.

The highest purchases made using ‘buy now pay later’ services by young Britons
category percent
fashion 57%
Technique 47%
health and beauty 27%
entertainment 23%
Houseware 21%
Food and drink 14%
Vacation and travel 9%

How do you use BNPL responsibly?

1. Budget responsibly

Although BNPL services are tempting, you should always make sure that you have the funds to repay the borrowed money.

Plan ahead with spending spreadsheets or budget calculator tools to get a clear understanding of your monthly finances as well as what’s possible within your budget.

Money management apps such as Emma and Money Dashboard can be a great way to allow you to have a better understanding and visualization of the state of your finances.

Described as your “financial best friend,” Emma is a free app designed to help you avoid overdrafts, cancel wasteful subscriptions, track debt, and save money.

Money Dashboard has been voted the best personal finance app in both 2020 and 2021 and is one of the most popular apps available, with half a million users.

It allows you to set up multiple budgets and send notifications in case of overspending, while also allowing you the ability to predict any future spending.

Whatever form it takes, spending beyond your means is a quick way to get into financial difficulty — especially when you have limited budgeting experience and your financial situation is variable, says Keith Kilkors, credit and loan publisher at Finder. A careful scrutiny is warranted.

2. Ask yourself – do I need this?

Half of 16-24 year olds admit they have to buy expensive items to show off on social media, according to Student Beans.

It found that, on average, young Brits use around £71 of their monthly food store budgets to buy clothes just to be worn on Instagram and TikTok.

Half of 16-24 year olds admit they have to buy expensive items to show off on social media

Half of 16-24 year olds admit they have to buy expensive items to show off on social media

“Before making a high-end purchase, always ask if you need the item or if it’s just for show,” says Louis Bouton of Student Beans.

3. Saving is better than borrowing

Although BNPL provides speed and convenience, it should be used for needs, not desires.

Putting money aside each month and then purchasing the item remains a safer option, says Kilkors.

“Let’s not forget that BNPL comes with associated risks – you could be hit with late payment fees or even damage your credit history if you default.”

4. You can return an item if you are not sure

Nearly half of shoppers return items purchased via a refund-later service before being charged, according to Student Beans.

“If your purchase isn’t what you hoped for, check your items’ return policy — you should have every right to return them — even if they were purchased through the BNPL payment system,” Bouton adds.

Some of the links in this article may be affiliate links. If you click on it, we may earn a small commission. This helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to influence our editorial independence.