Research carried out by comparethemarket.com has suggested young people are turning to “buy now, pay later” schemes while i lockdown, raising fears that internet retailers are encouraging customers into debts they cannot afford.
According to the data, young people in the 18 to 24-year-old bracket have used a buy now pay later with one in 6 schemes being accessed since the government ordered all non-essential high street stores to close, this is compared with one in 14 outside of that age group.
The data is concerning as young people’s finances are set to be the hardest hit with a third of employees in this age bracket already losing their job or on furlough.
Buy now pay later schemes are popular because they are quick and easy to access to make a purchase with the ability to pay back under interest-free, bi-weekly installments or by clearing the entire amount within 30 days. Alternatively, they can choose a financing plan with an interest rate similar to a credit card. The downside is if payments are missed and late fees applies with unpaid debts being passed to collection agencies. According to data, nearly 50% of those who used one of these schemes in the past year have missed at least one payment.
John Crossley, of comparethemarket.com which commissioned the research, said: “Our research suggests that young people, in particular, maybe turning to alternative credit schemes at a time of growing economic uncertainty. There remain serious concerns, however, over some people’s ability to keep track of their debt and prevent bills from racking up. If you are struggling financially there are dedicated services to provide help.”