Buy now pay later debt hit record highs: what the new rules mean for you

Buy now, pay later (BNPL) has become a familiar part of everyday spending, helping millions of people spread the cost of purchases.

But our latest figures show that more people are turning to BNPL while struggling with rising household costs. In June, the number of people seeking help with BNPL debt reached a record high.

From 15 July, new rules will come into force that bring BNPL providers under the regulation of the Financial Conduct Authority (FCA). These changes are designed to give you greater protection and make sure borrowing is affordable.

What is buy now, pay later?

BNPL allows you to split the cost of a purchase into smaller instalments, usually over several months. Many providers offer this without charging interest if you pay on time.

It has become hugely popular, with around half of UK adults having used BNPL at some point.

For many people, it can be a useful way to manage cash flow and spread the cost of larger purchases.

But because BNPL has not previously been fully regulated, customers have had limited protection if things go wrong.

BNPL debt reaches record levels

Our data shows that more people are seeking help with BNPL debt than ever before.

In June, we supported 4,520 customers with BNPL debt, the highest number recorded for that month and the second-highest figure ever, behind the traditional post-Christmas spike seen in January.

That means one in four people now seeking help from Money Wellness has at least one BNPL debt.

The figures suggest that some households are increasingly relying on BNPL to cover everyday costs as budgets come under pressure.

People are using more BNPL accounts

The way people are using BNPL appears to be changing.

• The proportion of customers seeking debt advice with at least one BNPL debt has risen from 15% in 2023 to 25% in 2026.
• The average number of BNPL accounts held by these customers has doubled, from 1.4 to 2.8 accounts.
• The average amount owed has fallen from £636 to £251.

While people may owe less on each individual purchase, many are now spreading smaller everyday expenses across multiple BNPL agreements.

Young people are particularly exposed

Younger adults appear to be among those most likely to use BNPL.

Customers aged 18 to 24 are twice as likely to have a BNPL account as older age groups, but they are around half as likely to have received financial education at school.

Without the right support and knowledge, it can be harder to understand how multiple repayments can quickly add up.

What will change from 15 July?

The government first announced plans to regulate BNPL in 2021, but the changes were delayed.

Now the new rules are finally coming into effect, giving you stronger protections when you use BNPL.

Here’s what you can expect:

• BNPL firms must be authorised by the FCA
  If a provider is not authorised, it will not be allowed to offer BNPL.
• You’ll get affordability checks
  Before you make a purchase, lenders will need to check that you can afford the repayments.
• You’ll get more support if you’re struggling
  If you fall behind or experience financial difficulty, firms will have to provide appropriate help.
• You’ll get clearer information
  Providers will need to explain what you are agreeing to in a way that is easier to understand.
• You’ll have stronger complaint rights
  If something goes wrong and the provider does not resolve your complaint, you’ll be able to take it to the Financial Ombudsman Service.

BNPL can help, but it shouldn’t become a way to make ends meet

Matthew Sheeran, our external relations manager, said BNPL has become part of everyday life for millions of people, and for many it can be a helpful way to budget and spread the cost of purchases. 

"The new regulations are good news because they'll give consumers greater protection and help ensure lending is affordable.

"Our concern isn't buy now pay later itself. It's what can happen when people begin relying on multiple forms of credit simply to make ends meet.

"Our data shows more people are holding several BNPL agreements at the same time, even though each individual purchase is for a relatively small amount. That can make it much harder to keep track of repayments.

"If someone who has always been approved suddenly finds they're declined after the new rules come into force, it could be a sign that their financial circumstances have changed. Rather than immediately looking elsewhere for credit, it's worth taking a step back and reviewing your finances.

“Getting free money advice early can stop a temporary problem becoming a much bigger one."

If BNPL is becoming difficult to manage, get support early

BNPL can be a useful budgeting tool, but if you’re using it regularly for essentials, juggling several accounts, or worrying about repayments, it may be time to seek support.

Getting debt advice early can help you understand your options and prevent small problems from escalating.