Buy now, pay later, usage increased in 2021, with one in five using it monthly
More Britons than ever are turning to buy now, pay for services later as the cost of living continues to rise, new research has found.
The number of customer transactions with Klarna alone has increased by 59% in the 12 months from December 1, 2020, according to TSB data.
Today, 18% use BNPL at least once a month, with 11% saying they use BNPL at least once a week.
It comes at a time when inflation and the cost of living are of great concern to households, with 31% of people feeling less confident in their financial situation.
The number of TSB client transactions through Klarna increased by 59% in the 12 months
TSB used its internal data to find out how its customers were spending over the past year and responded to a survey of 5,000 adults in December 2021.
The results show that 82 percent of people have already experienced an increase in their cost of living, such as the increase in the cost of groceries, basic necessities, gas and electricity.
Energy prices have skyrocketed in recent times, thanks to rising wholesale prices, which have pushed prices up by several hundred pounds for millions of consumers.
Fresh food costs are also rising at their fastest rate in nearly a decade, while homes can also expect increases in national insurance, municipal taxes, rail fares and mortgage reimbursements.
As a result, 23% said they had tapped into savings while 19% said they had changed their usual habits or behaviors such as changing their shopping habits and 36% had reduced their spending on non-essential purchases.
Another 19 percent increased their debt either by taking on new credit, increasing existing credit, or using their overdraft.
Against this backdrop, BNPL’s services continue to gain popularity, with many consumers using Klarna, Clearpay and others to spread payments or pay later.
Of those who use BNPL, one in four say they rarely have the money in their account to fully pay for the things they buy.
Research also suggests that some people using BNPL do so when they are having financial difficulties.
Experts are increasingly warning of the danger these services represent for users, especially young audiences.
Inflation and the cost of living are a major concern for households for the new year
The results revealed that tenants were hit the hardest by rising costs.
Of those who have difficulty, 83 percent are renters, compared to 15 percent who are owners.
To improve their financial situation, 55% say they are likely or very likely to reduce their spending while 18% can take out a loan.
Despite these concerns, Britons’ financial confidence in managing their money, preparing plans for the future and choosing the right products and services generally remains in line with the previous iteration of the TSB barometer, with 36% maintaining and 36% increase in savings since June 2021..
Research also found that 67% of people who use online banking feel more comfortable with their money because they can easily check their bank balance, use it for budgeting, and avoid going overdraft.
Another 42% say using online banking helps them save money every month – £ 166 on average.
Mark Curran, Director of Client Banking Services at TSB, said: “It is clear that many people are concerned about the impact of rising bills and inflation.
“Now is the time to really take control of your finances and research shows that many people are able to save money and budget better by using digital banking services.
“We know that many of our customers need support and we are offering new tools and features that will help them build confidence in their finances. “
The price of living is rising, and the prices of fresh food are rising at the fastest rate in nearly a decade
Budgeting tips for dealing with rising costs
1. Find out what you are actually spending: As prices and bills rise, now is the time to figure out where your money is really going. Browse your statements or use your bank’s digital tools to find expenses like direct debits and subscription services.
2. Don’t delay: Cancel payments for anything you no longer need or look for cheaper alternatives.
3. Use online banking if you can: A TSB study shows that 67 percent of those who use online banking services feel more comfortable with their money.
4. Try Open Banking: Data shows that consumers who use Open Banking feel more in control of their finances because they can see all of their accounts in one place.
5. Talk to your bank if you need help: Most banks offer services to help their customers in need, including advice on budgeting.
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