CHECKING her bank, Courtney Cross realises she has less than £100 in her account to last her for the next two weeks.
The mum-of-one re-checks her budget and a shot of fear goes through her as she realises her outgoings will be more than £250 in the next fortnight leaving her £100 short.
She needs groceries, nappies, loo paper, petrol and has bills to pay.
That’s when Courtney, 26, opens one of her four buy now, pay later (BNPL) apps on her phone and takes a deep breath.
“This week I am buying my groceries now and paying next month.
"I bought nappies courtesy of Klarna on Amazon and loo roll is coming from another BNPL app", she tells The Sun.
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“I used to only use these pay later schemes for big purchases. Now I am buying food and basics.
“I am using BNPL to buy milk, sausages, and bread. This is not a one-off. It is terrifying.”
“The cost-of-living crisis means I, and millions of other people like me, are buying cereal, butter, eggs and yoghurt on pay later schemes.”
The hairdresser is not alone in using BNPL for basics.
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In September 2023 Money and Pensions Service (MaPS) research revealed almost two million shoppers who use BNPL are now using it for essential items such as groceries.
Of the one in five households using BNPL for essentials, 11% are buying food, and 8% toiletries and hygiene products.
Another 5% use BNPL for household bills and 4% for fuel.
The Financial Conduct Authority (FCA) has found a significant increase in people using them.
The latest FCA statistics show 27% of UK adults had used BNPL to buy something during the six months to January 2023 – up from 17% in the 12 months before.
Shoppers who frequently used BNPL are more likely to be in financial difficulty, including missing bill payments and experiencing rising debts, according to the FCA.
But according to Courtney, who is mum to 18-month-old Wren, when you’re a parent and need food or bills paid BNPL provides an easy solution.
“Grocery prices are through the roof, petrol prices are skyrocketing, and winter is coming,” she said.
“Winter has started and there is no £66 monthly rebate [on energy bills] this year. We are all facing a crisis and BNPL is too easily available.
“You tell yourself you’ll only use the BNPL scheme ‘this once’ for essentials.
"But the ‘breathing space excuse’ is a band-aid – it is not fixing anything,” she says.
How it started
Courtney first started using the BNPL schemes three years ago.
“Friends told me about the schemes, and I thought I'd sign up just in case,” she said.
“I am very careful with money and run a hair salon and budgeting is critical.
“You don't need a full credit search with these schemes,” she says,
Courtney signed up to Klarna, Clearpay and two PayPal schemes including pay in three, and their buy now pay later offer.
“When I was five months pregnant with my daughter in December 2021, I used BNPL to buy her £450 cot,” she added.
“I knew after the birth money would be tight and BNPL made sense.”
However, in the last 12 months, Courtney’s finances have been pushed to breaking point by energy bills, petrol costs and grocery prices.
“I work as a hairdresser. I can't increase my prices in line with grocery prices. I‘d lose all my clients,” she said.
“I work longer hours, but the hikes mean I have to do way more for way less.
“That’s why I have been relying on buy now, pay later schemes for groceries, nappies, toilet paper and even a takeaway.
“I was shocked when I discovered you could Klarna a pizza, but occasionally it's a treat.
“In the last four months, I have been using a range of BNPL schemes for grocery shops, a bulk purchase of two dozen nappies on Amazon or to bulk-buy loo paper.
“It’s happening so regularly now I juggle four BNPL schemes for bills, groceries and basics. It’s no longer special purchases.”
“I have gone from once a month to using the schemes up to three times a week.
“I have vowed after Christmas to get on top of my finances but currently if I need to Klarna nappies or use Clearpay for groceries I will.
“I won’t be giving expensive gifts for Christmas. I’d have to use BNPL schemes. It’s a case of small presents and a better budgeted new year.”
“I won’t be giving expensive gifts for Christmas. I’d have to use BNPL schemes. It’s a case of small presents and a better budgeted new year.”
‘I’m working extra hours to wean myself off BNPL’
Courtney owes almost £500 on various schemes and knows it can be a spiral of economic crisis.
“If I keep using the schemes so regularly, my monthly payments will be impossible to meet,” she said.
“That's the terrifying thing. I am now working more shifts and taking on a second job in the form of a side hustle.
"I have started making custom vinyl for everything from cars to Mrs Hinch-style jar labels to make sure I can wean myself off BNPL.
“It is scary because when you only use the schemes once a month you can properly forward plan a budget. Using them weekly means you lose control.
“Paying a tenner here and £20 seems small but when you’re doing that multiple times and spreading the cost just to make dinner you will never get ahead.
“Doing a grocery shop on BNPL or picking up nappies and loo roll and putting on a system that means you use or eat the items now and pay later can make you feel like you’re in control but actually you’re not.”
“I started using BNPL so I didn’t accrue credit card debt and high interest rates. I now know if I don’t make payments it means my credit file will be affected.
“However, having to use the schemes for daily household items and food means it is a downward spiral of debt.
“I have missed payments and that meant juggling to ensure I didn’t get a black mark with the apps."
Courtney wants spending caps put on BNPL schemes and more advice for customers so they can learn to cope with this growing crisis.
Be aware of the risks
Energy and debt advice groups warn that using BNPL schemes for groceries and meals is a “really worrying” development and is a sign that individuals and families are having to resort to increasingly “desperate” measures to cover basic expenses.
Energy Support and Advice UK, which runs a Facebook-based advice service for consumers worried about their bills, is urging people to treat buy now, pay later offers to help with rising energy costs with “extreme caution” after detecting an increasing number of posts about such financing arrangements.
Meanwhile, Citizens Advice and other financial experts say there are cheaper ways to borrow and budget than using BNPL schemes, if you tend to fall behind on payments.
For example, you may want to talk to your bank and arrange an overdraft instead, but this may come with interest so check first.
If you have a low income and need emergency help with money, check if your local council has emergency funding schemes, and talk to local charities offering cost of living grants and support.
Create a budget to help you cope
Money experts recommend doing a weekly and monthly budget, which can be tricky if you already have lots of BNPL agreements.
However, it’s important to keep note of how much you are paid, what you owe, when the payments are due and add reminders as advance warnings to help you budget.
The most common pressures to use BNPL are for emergencies, Christmas and birthdays.
Keeping a budget can help you prepare for these expenses in advance.
It’s important to use a realistic budget and add a section for sundries and emergencies.
Long-term planning should include a section for birthdays and Christmas.
Try to put money away for these each month and review your budget regularly.
It’s important to note that falling behind on BNPL payments can impact your credit score.
Certain BNPL lenders also make a "hard" credit check every time you spread payments over a long period, which will appear on your record.
A Klarna spokesperson told The Sun: "We have a number of safeguards to protect consumers and ensure they’re able to meet repayments, including robust eligibility checks on each and every transaction and restricting our services if there are missed payments to stop debt building up.
"These guardrails clearly work as our loss rate is below 1%, 30-40% lower than what you’d see on a credit card."
While a spokesperson for Clearpay said: "Clearpay’s business model is designed to encourage customers to pay on time, differentiating it from credit card providers that thrive when consumers revolve in debt.
"When choosing a BNPL provider, we advise consumers to use a service, like Clearpay, that has customer protections built in, such as pausing accounts if a single payment is missed, to avoid accruing debt.
"Clearpay advises shoppers to buy only what you can afford, reschedule repayments if needed, and use email and text message reminders to make sure payments are made on time and there is money in your account."
The Sun also contacted PayPal for comment.
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