More than two in five recent buy now pay later (BNPL) buyers relied on credit cards or other forms of loans to pay what they owed, the Citizens Advice charity said.
He said the figures showed buyers are “piling loans on loans” and stressed the urgent need for BNPL to be regulated.
On Monday, Apple unveiled a BNPL feature for iPhone, which will initially launch in the US around September and could come to the UK a few months later.
BNPL allows buyers to spread payments on products without interest or fees, unless they do not pay on time, at which point some companies impose late fees. In general, the cost is divided into weekly, biweekly or monthly installments.
Two of the biggest BNPL firms operating in the UK are Klarna and Clearpay, and other big players include Laybuy and Zilch.
This form of credit has enjoyed explosive growth during the coronavirus pandemic, particularly among those under 30 and those with limited finances. However, the growth rate is believed to have slowed in recent months as the cost-of-living crisis has prompted people to cut back on non-essential spending.
In March, a survey was conducted for Citizens Advice involving 2,288 people in the UK who had used BNPL in the previous 12 months.
More than two in five respondents (42%) said they used some type of loan to finance their payments, with credit cards by far the most popular option. Others included overdrafts, loans from friends and family, and personal loans and payday loans.
Younger buyers were the most likely to borrow to pay for BNPL purchases. The charity found that 51% of 18-34 year olds borrowed money to pay off BNPL debts.
The government has said that BNPL will be regulated by the Financial Conduct Authority, although this is unlikely to happen until later this year or in 2023. Citizens Advice wants this regulation to include affordability checks by all participating companies and information clearer in online payments.
Millie Harris, a debt adviser at Citizens Advice East Devon, said that using credit cards and other types of loans to pay was “just relying on one debt to pay off another debt”.