LONDON, UK — One in every two UK consumers is planning to ditch their credit card entirely for Christmas shopping this year, with two-thirds of credit card owners wanting to avoid paying credit card interest. Despite credit cards promising interest-free periods, 46% of Brits that used their credit cards ended up paying interest on their Christmas shopping last year.
The data, which comes from Klarna’s Black Friday and Cyber Monday report launched today, confirms that UK consumers increasingly look for better value alternatives to traditional credit that can give them control over their finances, such as Buy Now, Pay Later (BNPL).
BNPL consumers shop smarter.
The figures released today by Klarna also show that BNPL consumers are much better at planning and budgeting for their Black Friday and holiday shopping:
● Better budgeters: 6 in 10 BNPL consumers have set an overall budget for their holiday shopping, compared with just 42% of those who had never heard of BNPL.
● Proper planners: 6 in 10 BNPL consumers already know what to buy during the Black Friday sales compared with only a third of those who don’t use BNPL.
● Smart shoppers: Half of BNPL consumers wait for Black Friday sales to make larger purchases compared to less than a quarter of people who never heard of BNPL
● Savvy savers: Over half of BNPL consumers research the best deals ahead of time compared with less than a third of those who don’t use BNPL.
BNPL consumers budget, plan, shop, and save.
A recent report by global management consultancy, Bain, found that BNPL saved UK consumers £103 million in interest and fees in 2020 by ditching their credit cards, and overall leads to much lower reliance on debt than credit cards. The average outstanding BNPL balance is £200 compared with over £500 for credit cards. According to Bain, BNPL accounted for 5% of total eCommerce, or £6.4 billion worth of purchases, in 2020.
Alex Marsh, Head of Klarna UK, commented: “This data shows that shoppers are increasingly smart and mindful about their buying decisions. It’s no wonder they are abandoning high-cost credit cards that are designed to obscure spending to drive up debt and interest payments. Helping shoppers plan in advance and budget smartly is baked into Buy Now Pay Later, giving people better control over their finances to save money and keep them out of debt.”
