Pensioners feeling the pinch are increasingly turning to buy-now, pay-later services, the latest sign of how the cost-of-living crisis is squeezing the UK population.

Almost a fifth of over 65-year-olds said they had used the popular short-term credit offered by fintechs, according to a December survey of 2,061 adults commissioned by the Centre for Financial Capability, a UK financial education charity.

That’s almost double the level recorded in 2021. Nearly half of over 65-year-olds who’d used or intended to use BNPL services saying that the main reason was because it was easier to spread costs over multiple payments, with many on pensions or fixed income having to manage increasing costs where they can.

“In times of rising costs and inflation these is an increased likelihood of using these schemes that aren’t regulated,” said Jane Goodland, chair of the Centre for Financial Capability. “The responsibility lies with the consumer to assess affordability. Our concern is the lack of financial literacy that can lead to further indebtedness which can of course have a snowballing effect over time.”

Buy-now, pay-later products offered by e-commerce firms such as Klarna, Clearpay, and PayPal allow users to split the cost into three or four payments. Regulators are increasingly scrutinizing the offering, as concerns grow over the rate of consumer borrowing and the increased reliance on fast-credit for every day goods such as groceries.

Read More: From Fashion to Food, Brits Using Fast Credit to Stretch Budgets

Gen Z and Millennials are most likely to have used the short-term credit product, with half of 18–34-year-olds surveyed saying they had used it, which is an increase from 44% last year.

Demand for the service has increased across all age groups in the UK. Some 36% of UK adults have used BNPL services in the past. That’s a 7 percentage point increase on the proportion of UK adults who said the same last year, the charity said in a statement.

The take-up of BNPL ballooned during the pandemic and the market is expected to grow to $600 billion by 2026, according to analysts Global Data. Still, after several years of rapid growth, rising borrowing costs risk eroding their margins just as soaring inflation makes credit more tempting — and more dangerous — for many customers.

–By Aisha S Gani (Bloomberg)