Brits Turning to Buy Now, Pay Later Schemes Amid Cost-of-Living Crisis

Hodge Bank analyses data to reveal how the cost of living has impacted spending and saving habits, with some turning to buy now, pay later options.

The data reveals nearly half (47%) of Brits are setting aside funds throughout the year for special occasions and holidays.

However, a third (33%) of the population prefers to live in the moment, spending their money as soon as they earn it.

Many of those who use buy now, pay later schemes say it helps them to manage expenses, with 16% saying it helps to have the payments spread out, 14% using it for convenience, and 11% admitting to using it to buy the larger items that they couldn’t spend the money on outright.

Despite this, a good portion of people in the UK remain committed to traditional saving habits, with 7 in 10 (77%) stashing away their extra cash in preparation for Christmas and New Year celebrations, 40% saving for birthdays and nearly a third (30%) setting aside money for anniversaries.

Christie Cook, managing director of retail at Hodge said: “Although buy now, pay later deals may sound like an easy option, they can come with some issues including higher interest rates, hidden fees, potential overspending, and impacting credit scores if not managed responsibly.

“Understandably, the cost of living is high, but there are ways to make some extra cash, even selling old clothes online could help the pennies add up in a savings account.

“The current average on a 1-year fixed rate ISA is 4.68%, with some sitting at 4.96%, meaning you gain up to £5 on every £100 you save.”

The UK’s top spending priorities

Occasion Percentage of people in the UK (%)
Christmas 77%
Birthdays 40%
Anniversaries 30%
Weddings (as a guest) 18%
New Year’s Day 13%

It’s clear Brits are struggling with cost; hence, some are opting for payment plans to afford life’s luxuries, such as holidays, concerts and furniture. 

Data from Hodge  revealed that 80% of Brits were most concerned about the increase in energy prices, 72% were worried about everyday costs and 61% were struggling with rising inflation.

Although concerns about the rising cost of living have eased slightly, it continues to impact over three quarters (76%) of people in the UK.

Biggest money worries in the UK

Cost of living concerns People in the UK (%)
Energy prices 80%
Cost of everyday items 73%
Rising inflation 61%
Fuel prices 52%
The effect on pension/retirement income 32%

Christie Cook, managing director of retail at Hodge, said: “Over the past few years, the UK has faced economic uncertainty, making financial planning a challenge. 

“It’s evident Brits are actively taking steps to manage their finances amidst these challenges, with the majority reducing their electricity usage to cut back on costs. 

“Additionally, nearly half (49%) of the UK population is preparing for their future by setting aside money in emergency savings.  Others are choosing to enjoy their money by saving for a holiday, while more than 4 in 10 (46%) are dipping into their savings. 

“With fluctuating interest rates on savings accounts, it’s understandable that consumers aren’t staying loyal to their bank. More than half (54%) of individuals say they would consider moving their savings if they found a more competitive rate.”