UK households resort to ‘buy now pay later’ loans to cover energy bills
UK households struggling with surging energy costs are being tempted into “buy now, pay later” financing schemes to spread out payments on their electricity and gas bills as the cost of living crisis deepens, according to consumer groups.
The warning signs are clear that people have been forced to take desperate measures as they struggle with increasing debt and an absence or decrease in income.
Energy Support and Advice UK, which runs a Facebook-based advice service for consumers worried about their bills, this week issued a warning on its site to treat “buy now, pay later” (BNPL) offers to help with rising energy costs with “extreme caution” after detecting an increasing number of posts about such financing arrangements.
Debt and energy advice groups have warned that consumers are better off approaching their energy supplier to negotiate repayments
The government is coming under increasing pressure for its response to the rising energy prices, which are fuelling a wider cost-of living crisis.
Britain’s energy price cap, which dictates bills for 22mn households, rose 54 per cent at the start of April to just under £2,000 a year on average and is forecast to increase further when it is next reviewed by the energy regulator Ofgem in October.
Chancellor Rishi Sunak earlier this year unveiled a £9bn package to help meet rising energy costs, including a £200 discount to be applied to all households’ bills in October and then repaid in £40 instalments over a period of five years from 2023.
The critics are right. The expected increase in October’s energy price cap will most likely wipe out any benefits from this program, and it may even lead to higher prices for customers who don’t use their heating as much during winter months!