Last year, BNPL schemes accounted for an estimated 13.9%, some £3.6 billion, of the UK’s festive spending, according to Adobe Analytics. This shows no sign of slowing, with recent research revealing that one in seven shoppers plan to use BNPL to fund their festivities this year.

It’s easy to see the appeal. BNPL offers quick, flexible finance with minimal friction, offering quick credit, manageable instalments, and often interest-free payments. It fits seamlessly with modern consumer habits too, particularly among younger generations. More than two thirds of millennials (69%) and Gen Z (68%) admit they’ve used some form of BNPL scheme.

While BNPL can be a useful budgeting tool, it carries risks for those struggling to manage their finances. The convenience can mask the reality of debt, becoming a costly trap, especially for young adults who are facing financial hardships.

Last year, one in four 18-24 yea olds (around 1.3 million) faced financial difficulty in the run-up to Christmas. This year is expected to be no different, with many facing job instability and lower incomes.

BNPL schemes can create an illusion of affordability. Splitting payments into smaller chunks makes big purchases seem manageable, yet juggling multiple instalments can quickly spiral into unmanageable debt, especially when unexpected costs arise.

This isn’t a call to restrict BNPL schemes, but rather a call to promote better understanding. The financial sector, from lenders to banks to debt recovery firms, has a vital role in educating consumers about repayment schedules, interest, and credit reporting. By doing so, we can help people borrow responsibly and avoid festive financial hangovers.

For customers considering BNPL schemes, practical steps can make a huge difference. Setting realistic budgets, prioritising essentials, and resisting the urge to overspend can avoid the financial strain brought about by Christmas.

For those who do feel it, reaching out early for support, whether through advice services or ethical debt recovery partners, can prevent matters from worsening. At Lantern, we’ve seen how compassionate guidance and open conversations can help people avoid debt,
and the financial industry must lead with transparency, supporting customers to get their finances in order before they laden themselves with debt. In doing so, they can enjoy Christmas without the worry of financial stress which lingers into the new year.