STUDENT Kaitlin Wraight used to spend £60 maximum when shopping at Asos – sending one or two items back after trying them on.
But since the site introduced a buy now, pay later scheme run by Klarna, she has found herself spending around £150 at a time.
This is more than the 21-year-old from Falkirk can afford — but she says it is so easy to be tempted to buy more.
She added: “When I knew the money was coming out of my account straight away I would be quite selective.
“But since they introduced Klarna, sometimes I just order everything that I want because it just feels like it’s free.
“I tell myself I will send some stuff back but often I don’t get round to it.”
She is not alone. Around one in ten of us will use buy now, pay later (BNPL) schemes to purchase goods and gifts this Christmas, a survey by Yorkshire Building Society found.
We take a closer look at some of the pitfalls.
PUTTING OFF PAYING
USE of BNPL soared during the pandemic.
Companies who run these schemes, such as Klarna, Clearpay and Laybuy, say it helps shoppers manage their money — and the firms profit from taking a cut from retailers, not consumers.
But critics argue that it encourages us to spend more than we can afford.
An estimated eight million adults now have debts from BNPL purchases after using companies to put off paying at the checkout, says credit reference agency Credit Karma.
The average debt per customer is £538, with total debts owed topping £4billion.
But the biggest BNPL firms strongly dispute those figures.
Klarna says its average customer debt is £48, while Laybuy says it is £55 and Clearpay £116.
SPENDING TOO MUCH
WHEN you do not have to pay for something up front it can feel like you got it for free, so it can encourage you to spend more, say psychologists.
Therapist Sally Baker explained: “Paying in the future feels so abstract it doesn’t feel like spending at all. It just feels like clicking a link.
“BNPL systems make spending so effortless we don’t have to think about it — and that’s dangerous.”
Kaitlin agrees. She said: “At the time you feel you are getting stuff for free but then when the time comes to pay it feels even worse than paying up front.
“You feel like you are having to pay all this money for nothing because you’ve already had the enjoyment out of your new stuff ages ago.”
YOU could be hit with late payment fees if you miss a BNPL repayment or fail to repay what you owe.
This could hit your credit score and make getting loans harder and more costly in the future.
One in five adults — and two in five of those aged 25-34 — who have used a BNPL scheme say it has hit their credit score, according to Compare The Market.
And two in five shoppers did not know that using BNPL could affect their score.
Online stores often lack clear information about the terms and conditions of deferring payments.
An investigation by Which? magazine found nine online retailers that did not include any information at all about late fees on their checkout, product listings or BNPL explainer pages.
Kaitlin got into problems when she first used Klarna, as she initially ignored payment requests, hoping they would go away.
She said: “I didn’t realise at the time it would affect my credit rating. I didn’t know anything about credit.
“I did pay eventually but I think it affected my credit score, as when I tried to apply for a credit card I got rejected.”
MORE REGULATION NEEDED?
EARLIER this year, the Financial Conduct Authority made urgent calls for BNPL providers to be regulated.
In February the Government announced it would be regulated by the watchdog, but delays mean it is unlikely any rules will come into force before 2023.
Jenny Ross, Which? Money editor, said its research showed people turn to BNPL at stressful and challenging times, such as when they are having a baby or moving home.
She said: “They are bombarded with online shopping checkout options, often with little or no information about late fees, credit checks and the risk of falling into debt.
“Retailers and BNPL providers should make it clearer that it is a form of credit.”