Most Brits are turning away from credit cards – Is BNPL the future?

By Gloria Methri

Traditional credit cards may be losing their grip on UK consumers as nearly three in four Britons now prefer Buy Now, Pay Later (BNPL) services. According to a recent study by Secure Data Recovery, BNPL has become the go-to payment option for many, with 75% of users viewing it as a superior alternative to credit cards. This growing trend highlights a fundamental shift in consumer finance, driven by ease of use, flexible repayment options, and interest-free instalments.

BNPL services have seen a rapid surge in adoption across the UK, with major providers like Klarna, Clearpay, and PayPal ‘Pay in 3’ leading the market. The research found that 41% of Brits have used BNPL services at least once, with a significant portion of users relying on these platforms for everyday purchases. The convenience and accessibility of BNPL have made it an attractive option, particularly among younger demographics who are increasingly wary of traditional credit models.

Why Consumers Prefer BNPL Over Credit Cards

The study highlights several reasons why BNPL is gaining an edge over credit cards:

Interest-Free Instalments: Unlike credit cards, which often carry high interest rates, BNPL services offer short-term financing with zero interest, making them a more cost-effective choice for many shoppers.

Ease of Use and Instant Approvals: BNPL platforms offer a seamless checkout experience with instant approvals, eliminating the lengthy application processes associated with traditional credit cards.

Better Budgeting: Many users find that breaking down payments into smaller, scheduled instalments helps them manage their finances more effectively without accumulating high-interest debt.

Challenges & Risks of BNPL

Despite its popularity, BNPL is not without its risks. The research found that over 20% of users have missed at least one instalment, leading to late fees and potential credit score impacts. Additionally, the ease of accessing BNPL credit can lead to overspending, with some consumers struggling to keep track of multiple repayments.

Another pressing issue is the lack of regulation. While the UK government has announced plans to regulate BNPL by 2026, concerns remain about consumer protection and responsible lending practices. As these services continue to expand, regulatory oversight will be crucial in ensuring they remain a sustainable alternative to credit cards.

What This Means for the Future of Consumer Credit

With BNPL reshaping the financial landscape, traditional lenders are responding by introducing their own instalment-based payment solutions. Banks and credit card providers are exploring flexible repayment options to compete with BNPL’s growing appeal. However, with increasing scrutiny and upcoming regulations, the future of BNPL will depend on how well providers can balance accessibility with responsible lending.

As the UK moves towards a more digital-first approach to payments, BNPL is poised to become a dominant force in consumer finance. But will it eventually replace credit cards altogether? Only time will tell.