New findings from Money Wellness reveal that almost half (43%) of Gen Z users consider Buy Now Pay Later (BNPL) services to be a risk-free method of managing spending — a perception that may be luring many into financial difficulty.
The study sheds light on how BNPL’s appealing image is encouraging young adults to lean more heavily on short-term credit to manage everyday costs. This growing trend is raising concerns among financial experts, who fear the long-term consequences of using BNPL as a budgeting tool rather than an occasional payment option.
The financial wellbeing provider surveyed BNPL users aged 18–28 and found that:
- 55% use BNPL to pay for holidays and festival tickets
- 54% use it to buy clothes
- 67% use it for one-off essential purchases
- 61% say it helps them budget
- 45% say it lets them enjoy luxuries they couldn’t otherwise afford
- 31% use it to cover the cost of essentials
- 14% use it for takeaways
- Nearly 60% are juggling 2–5 active BNPL plans at any one time, one in five have between six and 10, and 5% have over 15
While 88% say they’ve never missed a BNPL payment, most admit to using other types of credit alongside it, including credit cards (79%), overdrafts (30%), store cards (16%), car finance (17%) and personal loans (18%).
BNPL: blurring the line between money management and debt
BNPL has become part of day-to-day life for many young people, helping some manage their money, but creating risks when used without clear boundaries.
Sebrina McCullough, director of external relations at Money Wellness, said: “BNPL is often seen as a risk-free way to spend and it’s easy to understand why. Interest-free deals and simple sign-up processes make it feel more like a payment method than borrowing. But it is still credit, and when you’re using it on top of other credit or to fund a lifestyle you can’t afford, the risks start to build.”
Experiences now, pressure later
The findings suggest many young people are using BNPL to access experiences and items that would otherwise be out of reach. With long-term goals like homeownership becoming less realistic, some are choosing short-term enjoyment over saving.
Nearly half (45%) of those surveyed said BNPL lets them enjoy luxuries they couldn’t otherwise afford. For others, it’s seen as a budgeting tool, with 61% saying it helps them manage their money.
But relying on BNPL for clothes, trips and takeaways, without providers having to carry out affordability checks, is paving the way for money problems down the line for a significant number of people.
McCullough added: “What’s worrying is how embedded BNPL has become in day-to-day spending. Once you’re juggling multiple repayment plans and other debts on top, it can easily spiral. We often see people coming to us when they’re already overwhelmed, unsure where their money’s going each month.”
Regulation can’t come soon enough
Data from Money Wellness shows a 58% year-on-year increase in the number of people seeking help for BNPL debt, with outstanding balances averaging £711.
The government confirmed last week that it will bring BNPL under the regulation of the Financial Conduct Authority (FCA) from next year. The move will mean stricter affordability checks, clearer information for borrowers and stronger protections if things go wrong.
McCullough welcomed the move but warned that people could still get into trouble before the new rules are implemented: “Regulation can’t come soon enough as we’ve seen how BNPL can encourage spending without full appreciation of the risks. While we welcome the FCA’s involvement, the new rules won’t be in place for months. Until then, we’re urging people to approach BNPL with caution and make sure they’ve got a plan to repay.”
She added: “Used within affordable limits, BNPL can work for some people. But if you find yourself relying on it regularly or using it to cover everyday costs, it might be a sign that you need a bit of support. Reaching out for free debt advice or doing a quick budget review can help you feel more in control and plan ahead with confidence.”
