The first time Chloe used buy now, pay later (BNPL), she didn't even realise she was taking on a form of debt.
She was buying make-up online in 2020 when she was given the option to defer her £150 bill for 30 days.
And because the 25-year-old's payment details – such as her card number and her name – were already saved from previous purchases, she didn't even have to enter those.
'There were no warnings and no letters explaining how it worked,' says Chloe, who lives in Bristol and works in customer services.
'After 30 days I got a reminder to pay – then it spiralled.'
Chloe has never missed a BNPL payment – which could then add a high interest rate to the bill – but found herself trapped in an endless cycle of using it.
Trapped: Chloe, 25, racked up £2,000 in buy now-pay later debt after finding herself in an endless cycle of using it the payment schemes
'At one point I owed £2,000,' she says. 'I used it for clothes, make-up, takeaways – nothing important.
But once you settle the bill out of your wages, there's nothing left for the day-to-day spending, so you have to use buy now, pay later again for future purchases.
'It's too easy to use, so you don't think about it and then it adds up. I found myself using it for Deliveroo takeaways and shopping.'
But Chloe is now one of the millions of borrowers who, from today, could be locked out from using BNPL.
BNPL is a type of short-term borrowing that offers shoppers the chance to stagger payments, usually over three or four instalments, with the click of a button at checkout.
Although it's most popular among younger shoppers, almost a third of users are aged between 46 and 61, according to debt advice provider PayPlan.
The sharpest increase in users over the past year has been among older shoppers.
But in a monumental overhaul, from today BNPL will be bound by a new set of rules designed to give shoppers better rights and help prevent them from falling into problem debt.
However, the strict rules will mean, as a result, more than 1.6 million people could be blocked from using it.
While this should help prevent users from struggling in the long term, it could cause difficulties for those, like Chloe, who have been relying on BNPL to get by.
BNPL is a form of payment usually used for smaller purchases – an average of £114, according to research – and is different to a credit card or loan because the borrowing is for a shorter period.
Pay on time and it's usually interest-free with no charges. One of the largest lenders, Clearpay, allows users to pay in four instalments over six weeks, while PayPal customers can pay in 30 days or in three chunks spread over two months.
Klarna offers a 'Pay in 3' option of three interest-free payments over three months.
But if you fail to pay back on time, fees are imposed. These can be up to £10 for a Klarna purchase and £24 for other providers, so costs can quickly mount up for regular users.
Many of the largest retailers, such as John Lewis, Boots, Shein, H&M and Next, offer BNPL as a payment option.
It is typically listed at the checkout when you buy online, alongside debit card and voucher payments, with some users saying they have little clue that ticking the box means taking on debt. It is also becoming increasingly available at tills in store.
Crucially, until today, BNPL has been unregulated. This has meant that, unlike other types of borrowing, companies have not had to carry out checks to make sure borrowers can afford the debt they took on, and there was little recourse for shoppers if something went wrong.
Debts: Paul Mulholland started using BNPL a year ago to buy groceries and clothing because he was struggling to afford the basics and thought it was a useful way to defer the cost
But in a major crackdown, lenders will now need to be approved by the Financial Conduct Authority (FCA), the City regulator.
This means that if something does go wrong, with customers feeling they've been treated unfairly, they will now be able to complain to the Financial Ombudsman Service, giving them much-needed protection.
The financial arbiter has the power to award compensation or ask the company to take steps to rectify a situation or any errors on someone's payment record. As the new rules come into effect today, it is hoped that fewer people will end up in problem debt through BNPL.
Users will be given clear details upfront about their agreement, including information about when payments are due and what happens if they miss one.
However, many who have already racked up debt under BNPL and who have cause to complain will be left behind by the new rules.
Matthew Sheeran, from debt advice service Money Wellness, says: 'The new rules only cover lending taken out on or after July 15, so won't apply to existing agreements.
'Anyone struggling should speak to their provider and take advice early. If someone who has always been approved suddenly finds they're declined, it could be a sign their finances are strained.
'Don't just look elsewhere for credit, it's worth taking a step back and reviewing your finances.'
Under the new rules, lenders will carry out checks to see what customers can afford to repay before offering credit, and should provide support if users end up in financial difficulties.
To test affordability, shoppers who want to use BNPL will likely need to complete a short online questionnaire, which might ask about their annual salary, and undergo a 'soft search' of their credit record.
This is where a lender looks to see if the customer has a record of paying off debt on time. This search doesn't leave a mark on the credit record and can't be seen by other lenders.
It has been estimated that as many as one-third of users may no longer have access to BNPL once these checks are in place.
Research by the debt charity StepChange found that 11 per cent of adults – equivalent to five million people – have used BNPL in the past 12 months. Therefore around 1.65 million could now find themselves blocked from using it in future.
That could mean, for example, that users may have to clear some of their outstanding debts in order to pass the new affordability checks before they can use it again.
In theory, it means customers such as Chloe, who have taken on more debt than they can afford, won't have the option of paying later.
In March 2025, Chloe sought advice from StepChange after her debts got out of control. She owed about £20,000 across a loan, credit cards and BNPL. About £2,000 of this was with BNPL.
Chloe documents her situation on the social media platform TikTok at @chloesdebtdiaries, and says speaking openly about it keeps her accountable. She pays £690 a month on her debt management plan and hopes to have cleared it all by August.
A debt management plan is an arrangement with creditors to pay down what you owe over an agreed period. While it is less extreme than bankruptcy, it still has a big impact on your credit record.
But Chloe says that even though her credit score is in tatters, and no credit card company will speak to her as she's on a debt management plan, because BNPL is unregulated she has still been able to use it.
'Having something so accessible is not good for people like me with spending problems,' she says. 'You get trapped in the cycle of using it. They shouldn't be lending me money – I'd rather they didn't let me use it.
'I caved yesterday and spent £360 on new clothes. It baffles me I can do that – I know it's bad.'
She adds. 'I asked the BNPL company to block me – they delete your account but you can just open a new one. It leaves me in a vicious cycle every month. I'm addicted to it – I don't want to use it any more but it's so easy.
'I'm bad with spending. I had no financial knowledge and didn't know how money worked. Now all my money every month goes towards paying off debt. I hope the new regulations will help me finally kick my BNPL habit.'
Interest: Klarna offers a 'Pay in 3' option of three interest-free payments over three months. But if you fail to pay back on time, fees are imposed
An FCA spokesman said: 'Buy now, pay later can be a useful form of credit but people deserve to be protected when using it.
Lenders should check their customers can afford to pay it back. Millions of customers will now get clearer information before they sign up, and better support if something goes wrong.'
Vikki Brownridge, the chief executive of StepChange, says: 'We have been sounding the alarm about unregulated BNPL for more than five years.
'There is no doubt BNPL can be a useful form of credit to spread the cost of a bulky expense but, as with any form of credit, regulation is vital to protect customers if something goes wrong and to ensure people aren't being offered credit where it's not affordable.'
Launched in the UK in 2014, BNPL has become increasingly popular – it's estimated £35billion will be spent through this form of credit in 2026. But those using it are far more likely to have money issues.
An estimated 41 per cent of people who use BNPL are in problem debt, according to StepChange, compared to 8 per cent of the wider population. Some 3 per cent of people are even using BNPL to cover essential household bills.
One of them is Paul Mulholland. He started using BNPL a year ago to buy groceries and clothing because he was struggling to afford the basics and thought it was a useful way to defer the cost. Now he has BNPL debts of more than £2,000.
'It's like a drug. It's too easy to use and it creeps up on you. Then, when you try to get out, you can't,' says Paul, 69, who lives in Belfast.
Similar to Chloe's situation, Paul says he got trapped in a cycle of using his income to pay off BNPL debt, which would leave him with too little to live on so he would have to turn to the payment method to get by.
He says: 'They don't send out statements or letters so you're just getting in deeper and deeper without realising.
'I only found out how much I owed once I logged on to the website to check my account. It's not a huge amount, but £2,000 is a lot when you don't have it.'
Paul, who is retired, lives off the state pension and a small pension from a job in the civil service. But after his £635 monthly rent is paid, there is little left, he says.
He began using BNPL to help with budgeting for household essentials. He says: 'When I started using buy now, pay later, I was at the point where I had to choose between heating my apartment and buying food. It didn't register as being debt.
There were none of the warnings you'd get if you took out a loan, telling you what will happen if you can't pay it off.
'Then you get trapped in a cycle and all your money is going towards clearing the debt.'
Earlier this year he finally sought practical help from the debt charity Money Wellness. He has now started a payment plan and hopes to clear his debt within three years, by paying £95 a month.
He says: 'The Government should be doing more to help, and there should be more warnings about using these payment methods and help to learn about how to use them.'
Sheeran, from Money Wellness, says: 'Some people who have previously been approved may now find they're turned down, but that shouldn't be seen as a reason to keep applying elsewhere.
It's a chance to take a closer look at your finances and consider whether taking on more credit is really the right option.
'Used in the right way, BNPL can help people spread the cost of something they know they can repay. But if you're relying on credit to pay for everyday essentials, it's often a sign that you might need some money support rather than another repayment to manage.'
If you are struggling with debts, do not bury your head in the sand – speak to your lender about payment options. And charities such as StepChange, Money Wellness and Citizens Advice can also offer free, impartial advice and direct you towards practical help.
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