Sponsored Insta posts prompt Brits to borrow £650m on buy-now, pay-later

• Brits have been influenced to take out more than £650 million in BNPL debts by sponsored Instagram posts

• The average buy-now, pay-later sponsored post flaunts £1.8K worth of purchases

• This could fuel a cycle of debt as nearly 40% cover repayments on credit cards and loans

Instagram influencers who were paid to endorse buy-now, pay-later (BNPL) fuelled more than £652million in borrowing amongst followers trying to replicate their lifestyles.

According to a Credit Karma, review of buy-now, pay-later sponsored posts by the UK’s biggest influencers found that an individual would need to spend an average of £1.8K to buy the items typically displayed. This is 91% of the average monthly salary in the UK.

This could lead to an even greater cycle of debt, as nearly 40% of BNPL customers use credit cards and loans to cover buy now, pay later payments.

One in eight (12%) have used buy-now, pay-later schemes after seeing endorsements from celebs and social media stars. Young people are particularly susceptible, with 20% of people under 34 confirming they were influenced by these ads.

Many consumers admit they place trust in brand and product recommendations they see online (31%), and are more likely to buy something if a well known celebrity or influencer endorses it (26%).

Of those who’ve used BNPL, almost a quarter (23%) have already missed their repayments. This is more prominent amongst men, with 30% of those surveyed unable to keep up with the payments, compared to 17% of women.

Social media ads are one of the biggest triggers for consumers using buy-now, pay-later deals (15%), behind retailer notices at online checkout  (32%). However, overuse of the BNPL tools can lead to a cycle of debt, as nearly 40% have resorted to credit cards or loans to pay off BNPL repayments.

But the majority of BNPL users (66%) agree that sponsored social media posts should be clearer about the financial risks associated with the services. And as the industry awaits further regulation, shoppers should remain vigilant to influencer posts that could encourage impulsive spending through easy methods of borrowing.

Ziad El Baba, General Manager at Credit Karma comments: “Whilst using buy-now, pay-later can help consumers spread out their payments over a longer period of time, it can also lead to debt, missed payments and a dent in an individual’s credit score. Our research shows that 45% of buy-now, pay-later users have noticed a decrease in their credit score after missing a BNPL payment. In the long run, this can make it harder for Britons to access financial products and make it more costly for them to borrow, which can cost them more money down the line.”