MUM-OF-TWO Jenny* relies on buy now, pay later for the Zilch company to buy basic items like diapers, milk, and food for her little one.
Her family is just one of many who now rely on BNPL financing as a way to survive.
She has only £300 to pay for food and other household necessities once rent and bills are paid.
“I feel a bit defeated as a mother. I had these kids, I brought them into the world, I had to raise them and take care of them – but then you don’t know if you can make it,” Jenny said.
“With the current food price situation, that’s not even enough for two weeks. So it was a struggle.”
“I don’t buy TVs and unnecessary things. That would be bread, milk, diapers, fruit, vegetables, meat, canned lunches. It is a constant cost. ”
Jenny spoke to BBC’s Panorama as part of their investigation into the Buy Now Pay Post industry.
The documentary reveals that nearly 30% of the adult population regularly uses Buy Now Pay Later, an increase of 2.6 million people since last Christmas.
Research by global data company Equifax also shows that shoppers spend 51 more than those who pay upfront.
While Jenny says having a Buy Now Pay Later option is convenient, she says it’s “a sad state of affairs where you have to rely on it to pay for your meals.”
Her family’s financial situation has been troubled in recent months after their rent increased and the cost of their energy, gas and food bills skyrocketed.
“A few months ago I desperately needed to get some milk and some soap for lunch and I had nothing in my account but a little credit available on Zilch, around £20 I think.
“I had to contact my mum to ask how much it costs to use it, because every transaction outside of the online store costs £2.50. So I had to ask her for £2.50, so I could use it.”
Jenny says the situation makes her feel “heartbroken” – but she’s not the only one struggling with debt.
In the first eight months of this year, the average UK household debt has increased by more than a thousand pounds, to 17,283 pounds.
Now Jenny is worried about maintaining her BNPL payments as she is stuck in a debt cycle.
She added: “I have a mental breakdown once a month. I’m just trying to figure out when I’m about to pay my next payments, whether I can afford to make the next payments after that. So it had a pretty big effect on the family. “
As well as Zilch, Jenny is also signed up to Clearpay and has access to around £1,000 of credit across two providers.
While she only uses them for essential purchases, she says accessing that amount of credit can land you in serious debt.
“That would take me a long time to pay off my debt,” she said. “We have income and its monthly income. So I won’t be able to return that at all. “
Simon Kendall is an independent debt advisor who helps people with debt problems in Leeds. He says many of his customers are already in a lot of debt before they sign up for Buy Now Pay Later.
He told Panorama: “The industry has become incredibly big and has had a huge boom. I can say that about 30 to 40% of my clients have used it in some form, whether it’s a short term grading, a quick fix or it’s a small, long term thing and that’s normal. frequently for them.
“I see perhaps a greater increase in families using it to get between thirty and forty years old.
“So customers don’t come to us for Buy Now, Pay Later, which is usually the tip of the iceberg.
“Usually there’s some fundamental problem – paying for Buy Now Postpaid products is worse than they are, making their financial situation even worse.
“Some of these clients should never have been able to apply in the first place.”
In September 2020, the Financial Conduct Authority (FCA) authorized a review, led by Christopher Woolard, recommending the industry should be regulated to ensure better protection for its users.
The government told Panorama that it is looking at the most efficient way to bring such products into the scope and is trying to resolve the issue as quickly as possible.
“Consumers today are driven by convenience and will choose to shop and pay in the easiest and most affordable ways,” says Zilch.
It said it “combines open banking with soft credit checks so that credit scores are not affected.”
A spokesman added that it supports regulation and responsible lending.
Clearpay says credit checks don’t work for “small everyday purchases”.
Instead, it says “we build trust with our customers, they start with lower amounts, and these limits only increase as we see positive payment behavior taking place. ”
Clock BBC overview Buy now, pay later: New debt crisis? on BBC One at 7:35 tonight and on iPlayer afterwards.
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https://www.thesun.ie/money/8065991/mum-afford-nappies-food-baby-buy-now-pay-later/ I can’t afford diapers or food for my baby so I have to rely on Buy Now Pay Later to survive