Spike in ‘Buy Now Pay Later’ debt as new regulations set to take effect

Buy Now Pay Later (BNPL) debt reached a record high in June 2026, just weeks before new lending regulations are set to take effect. Data from the free money advice service Money Wellness reveals that 4,520 customers sought help with BNPL debt last month. This marks the highest June figure on record and is second only to the typical post-Christmas spike seen in January. The figures show that one in four people currently seeking debt assistance from the organisation has BNPL debt. This is an increase from 15% in 2023 to 25% in 2026.

Buy Now Pay Later use is on the rise

BNPL services are a popular way to spread the cost of purchases and manage cash flow. However, the data suggests that reliance on this form of credit is shifting as household budgets remain under pressure. While the average amount owed by customers seeking help has fallen from £636 to £251, the average number of BNPL accounts held by individuals has doubled from 1.4 to 2.8. It indicates that consumers are increasingly using multiple BNPL agreements for smaller, everyday purchases rather than occasional high-value items. Young adults are particularly affected, with those aged 18 to 24 twice as likely to hold a BNPL account compared to older age groups. They are also around half as likely to have received financial education at school.

New FCA regulations explained

From 15th July 2026, the Financial Conduct Authority (FCA) will regulate BNPL providers. This will bring these services into line with other mainstream consumer credit products. The new rules are designed to protect consumers and will introduce several key changes:

• Affordability checks - Lenders must carry out robust assessments to ensure customers can afford the repayments before approving a loan.
• Clearer information: Providers must clearly explain how their BNPL agreements work, ensuring the terms and risks are easy to understand.
• Stronger protections - Firms must offer appropriate support to customers who experience financial difficulty.
• Dispute resolution - Consumers will have the right to escalate unresolved complaints to the Financial Ombudsman Service (FOS).
• Refund rights - In a major change for consumers, eligible purchases made using regulated BNPL will soon benefit from Section 75 protection under the Consumer Credit Act. While this type of protection is traditionally associated with credit cards, the new rules mean BNPL providers will now also be held jointly liable with the retailer if something goes wrong with a BNPL purchase costing between £100 and £30,000.

What the changes mean for you

The regulatory changes are widely seen as a positive step for consumer protection. However, the introduction of stricter affordability checks means that some individuals who have previously used BNPL without issue may find their applications declined for the first time. Money Wellness suggests that being declined for credit should be viewed as an important warning sign rather than just an inconvenience. It may indicate that a person's finances are becoming stretched.

Matthew Sheeran, External Relations Manager at Money Wellness, said: "Our concern isn't Buy Now Pay Later itself. It's what can happen when people begin relying on multiple forms of credit simply to make ends meet. Our data shows more people are holding several BNPL agreements at the same time, even though each individual purchase is for a relatively small amount. That can make it much harder to keep track of repayments."

Is Buy Now, Pay Later the best way to spread the cost of a purchase?

Buy Now, Pay Later is, at least initially, a very easy-to-use credit system that is often built into online retailers' customer journeys. This can make it a good way to spread the cost of a purchase, but can also make impulse buying easier and problem debt more likely. The new protections should help consumers use BNPL more safely, or avoid it altogether if it's not the right option.

Depending on the situation and the type of spending you are looking to do, you could consider a credit card with 0% interest offers on purchases and/or balance transfers instead. The best deals let you spread payments over 2 years without incurring interest.

You can read more about BNPL in our article ‘What is Buy Now, Pay Later?’ and explore more credit card options in our 'Best credit cards in the UK' article.