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BNPL Schemes Have a Negative Emotional Effect on People, Warns HyperJar

Buy now, pay later (BNPL) customers are borrowing money to make their repayments leaving almost a third of Brits exposed to more debt and spending, warns HyperJar.

The money-saving app has investigated Brits’ spending habits to identify that almost a fifth of Brits say their biggest debt comes from BNPL schemes. A figure that even rises to 27 per cent for those aged 25 to 34.

HyperJar also shows that over a quarter (28 per cent) of people are more exposed to debt and spend culture than saving. Although 19 per cent of Brits say that seeing money stack up makes them feel better, they’re still addicted to spending. This is backed by a separate 2021 study, which found that 42 per cent of 16 to 24 year olds used BNPL schemes, with 57 per cent using this to update their wardrobe, and 47 per cent using it to buy tech products.

The Money Charity reveals that personal debt across the UK totalled £1.8trillion in June, up a massive £62.5billion from the same time last year. Averaging to £3,855 per UK adult and £64,970 per household (including mortgages), these figures show that debt culture is seemingly engrained into society and Brits’ spending habits.

Education is needed

HyperJar has urged better education for the younger generation about debt and how to avoid the significant repercussions that come with this.

Mat Megens, CEO and founder of HyperJar, says: “Our research clearly shows emotional, ‘quick hit’ spending is a cause of debt for millions of people – especially for younger generations. It’s the financial hangover after that instant dopamine hit from spending. That obligation to pay for things after you’ve got them has a negative emotional effect, whether we know it or not, because we now have a debt which prevents is from doing other things in life.

“Recent research from Citizen’s Advice shows that a staggering 42 per cent of people are actually borrowing money just to be able to meet their repayments for BNPL schemes, and it won’t be long before defaults drastically increase.

“Rising interest rates are also putting further pressure on these firms who rely on being able to borrow money cheaply in order for the business model to work. We’re already seeing the material effects of this with the huge slashing of valuations for businesses such as Klarna. I expect we will see more of a focus on the save now, buy later ethos that we’re championing at HyperJar.”

HyperJar also recently unveiled two new senior hires to help drive its growth plans. Having amassed over 340,000 users in under two years, the appointments of Nicola Longfield as chief commercial officer and Amabel Polglase as chief marketing officer will be key in building on HyperJar’s success.

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