BNPL Debt: Buying Groceries on Credit

The Hidden Cost of Convenience: How 'Buy Now, Pay Later' Is Fuelling a Debt Crisis

Millions of people across the United Kingdom are turning to 'buy now, pay later' services to afford basic necessities, trapping them in a perilous cycle of debt. For many, including single parents and those on low incomes, these easily accessible credit options have become a lifeline in the face of soaring living costs. However, this convenience comes at a high price, with families accumulating thousands of pounds in debt for everyday items like groceries, school uniforms, and utility bills. The situation has prompted urgent calls for tighter regulation from groups offering debt assistance, who are witnessing a dramatic surge in people seeking help for unmanageable BNPL commitments.

A Lifeline for Struggling Families

For Abi, a single mother raising four children in Sheffield, the appeal of BNPL services was undeniable. Initially using them for larger, one-off purchases, she soon found herself relying on applications like Zilch, Klarna, and Clearpay for daily essentials. The 37-year-old trainee barber explained that the temptation to defer payments is immense when money is tight. A weekly £40 travel pass, for instance, becomes manageable with an initial £5 fee, but missed payments trigger a cascade of additional charges. Abi now owes approximately £3,000 to various BNPL firms, a situation she terms a repeating cycle of hardship.

The Rise of BNPL for Essentials

Abi’s story is far from unique. Research reveals a startling trend of households utilising these unregulated credit lines to address shortfalls in their financial plans. According to the Money and Pensions Service, BNPL is being used by almost two million individuals in Britain to cover fundamental costs. Citizens Advice reports that one in twelve people have used these services for essentials like food and toiletries in the last six months, a figure that jumps significantly for regular users. This shift from discretionary spending to subsistence purchasing highlights the deepening financial strain on UK households.

Debt Charities Sound the Alarm

Five major organisations that offer debt assistance have reported a significant increase in clients struggling with BNPL-related debts. Money Wellness, a service providing debt guidance, saw a 44% rise in people requiring assistance for these particular liabilities in the twelve months finishing in September 2025. Over that timeframe, the National Debtline and Business Debtline assisted 11,000 individuals with similar issues. Citizens Advice noted an annual increase of 48 per cent in such cases, while at Christians Against Poverty, 14 per cent of the people they helped had BNPL liabilities in 2024, an increase from 9 per cent the previous year.

A Flawed System of Credit

A core problem lies in the minimal credit assessments that BNPL providers conduct. These evaluations often fail to reveal a person's wider financial situation, such as existing loans with other lenders. Consequently, individuals can accumulate multiple lines of credit from different providers, none of whom have a complete picture of the borrower's overall indebtedness. This regulatory grey area allows people to take on more debt than they can sustainably manage, pushing them further into financial distress.

The Cost of Living Connection

The escalating expense of daily life is a primary driver behind the increased reliance on BNPL. With food prices having surged by 37% over the past five years, a weekly shop that once cost £10 now demands £13.70. This relentless pressure on household budgets forces many to seek short-term solutions to manage their finances. Tom Gibbons of Money Wellness stated that surging living expenses have strained the financial resources of individuals to their absolute limit, with young single mothers being a particularly vulnerable demographic seeking help.

Regulation on the Horizon

The UK government has recognised the growing problem and is set to introduce new regulations. From mid-2026, the Financial Conduct Authority (FCA) will oversee the BNPL sector. This will compel providers to conduct more rigorous affordability checks, ensuring borrowers can actually afford the repayments. The new rules will also grant consumers greater protections, including the right to complain to the Financial Ombudsman Service, bringing BNPL products in line with other forms of consumer credit.

A "Wild West" Market

Until these regulations take full effect, the market continues to operate with minimal oversight. Emma Reynolds, the Economic Secretary to the Treasury, described the current situation as a "wild west" that leaves consumers dangerously exposed. The imminent changes aim to end this era of unregulated borrowing, stopping people from falling into debt traps and providing the sector with the certainty it needs to grow responsibly. The reforms will replace a 50-year-old consumer credit framework with one that reflects modern borrowing habits.

The Impact on Credit Scores

Contrary to what some users believe, BNPL services can and do affect credit scores. Since 2022, many lenders have started sharing payment information with the UK's main credit reference agencies. Consistent, on-time payments can positively influence a credit score by demonstrating responsible borrowing. However, missed or late payments are recorded as negative markers, which can lower a person's score and make it more difficult to obtain credit in the future.

The Danger of Missed Payments

Missing a BNPL payment can have severe consequences. Initially, lenders apply late fees, which can quickly accumulate. If payments remain outstanding, the debt is often passed to a collection agency. Citizens Advice has reported that one in ten BNPL shoppers have been contacted by debt collectors, a figure that rises for younger consumers. This can lead to significant stress and anxiety, with some individuals admitting to losing sleep and fearing knocks at the door.

A Cycle of Borrowing

Worryingly, a significant number of BNPL users are borrowing money from other sources to meet their repayment obligations. Citizens Advice found that nearly a third of users who had a payment due in the last month resorted to further borrowing. This creates a dangerous debt spiral, where new credit is taken out simply to service existing liabilities, often at a much higher interest rate, completely defeating the purpose of the initial interest-free offer.

Seeking a Way Out

For those overwhelmed by BNPL and other debts, there are options available. Abi is currently in the process of seeking a Debt Relief Order (DRO), a formal insolvency solution for people with low income and minimal assets. A DRO halts debt repayments for twelve months, and if the individual's monetary position remains unchanged, the liabilities could be cancelled. This solution, however, has a long-term impact on a person's credit file for a period of six years.

Record Numbers Seeking Relief

The use of DROs has surged to record levels, indicating widespread financial hardship. The Insolvency Service reported a record high of over 4,200 DROs approved in August 2025. This increase followed the removal of a £90 application fee in April 2024, making this debt solution more accessible to those in dire need. The rising numbers are a clear signal of the extreme financial pressure many households are currently under.

A New Beginning for Some

Jennifer, a single mother aged 26 and living in West Yorkshire, successfully obtained a DRO in July after accumulating £5,000 in BNPL debt. She described the experience as receiving a "clean slate," finally allowing her to "breathe again" without the constant fear of contact from collection agencies. Like many others, she commented that gaining access to the credit was far too easy, leading to a pattern of use that quickly spiralled into a significant problem.

The Psychological Toll

The burden of debt extends far beyond financial metrics. The constant stress and worry can have a profound impact on mental health. StepChange Debt Charity found that individuals with BNPL loans are significantly more likely to report that credit has negatively affected their health, relationships, or work. The pressure to meet repayments can lead to sleepless nights and a constant state of anxiety, affecting every aspect of a person's life.

Vulnerable Groups Disproportionately Affected

While BNPL is used by a broad spectrum of the population, certain groups are more vulnerable to its risks. Research from StepChange indicates that BNPL borrowers are typically younger than those using other forms of credit. The data also shows that women and individuals from minority ethnic backgrounds are more likely to hold BNPL loans. Furthermore, single parents are disproportionately represented among those struggling with BNPL debt, according to Citizens Advice.

The Illusion of Free Credit

One of the primary attractions of BNPL is the offer of interest-free credit. This allows consumers to defer the expense of transactions without incurring the high interest rates associated with credit cards or overdrafts. However, the model relies on late fees and charges to generate revenue, alongside commissions from retailers. This structure can be misleading for consumers who may not fully appreciate the financial penalties for failing to meet the strict repayment schedules.

A Call for Financial Education

The rise of BNPL highlights a broader need for improved financial literacy. Many consumers enter into these credit agreements without fully understanding the terms and conditions or the potential consequences of missed payments. Debt charities and consumer groups are calling for greater transparency from lenders and more accessible education to help people make informed financial decisions and avoid falling into debt traps.

Looking to the Future

The forthcoming FCA regulation is a crucial step towards creating a safer BNPL market for consumers. By enforcing affordability checks and providing avenues for redress, the new rules will introduce much-needed accountability. For the millions of people already caught in the BNPL debt cycle, however, the path to financial recovery will require ongoing assistance from financial counsellors and a concerted effort to address the root causes of financial vulnerability across the United Kingdom.

A System Under Strain

The stories of individuals like Abi and Jennifer underscore a systemic issue. As the expense of daily life continues to stretch household budgets to their breaking point, convenient credit solutions will remain an attractive but hazardous option for many. The challenge for regulators, lenders, and support organisations is to build a financial ecosystem that provides support without creating dependencies, and offers lifelines that do not become nooses. The journey towards a fairer and more transparent credit market is underway, but for many, the changes cannot come soon enough.