Struggling families are getting caught in a poverty trap by racking up hundreds of dollars of debt using buy now pay later schemes for meat, nappies and other everyday essentials, budget advisers warn.

Financial mentors are increasingly alarmed by the number of people buying groceries through lenders Afterpay and Zip, as low-income whānau struggle to cope with the cost of living.

At a Mad Butcher store in Christchurch, every shopper spoken to by RNZ was buying meat using a buy now pay later service.

Cleaner Mei said she used Afterpay to buy $120 meat packs for her family of six because she could not afford to pay up front.

"It's my pay-day today and I'm just about broke - that's just food - and I've only got my meat so far. I need to go to Pak'nSave and spend the rest of my money there," she said.

Mei said she was paying $300 a fortnight in Afterpay bills for meat alone.

"I can't get out of it. I'm continuing to Afterpay all my meat from now on. It's just a repetitive cycle that I'm stuck in now. I suppose it's like a gambler, going to the machine and putting in $20," she said.

Another shopper - a mother-of-three on a benefit - said felt she had no choice but to buy food using Afterpay.

"A mother will do anything to feed her kids," she said.

"If you were really strapped you could do a whole week's shop on Afterpay at the Mad Butcher, but two to four weeks later, if you have to do that the next week as well, eventually the payments stack up on each other.

"You're already broke, you've got to rob Peter to pay Paul."

She had just managed to pay off her Afterpay bills, but another big expense was never far away, she said.

"It just depends on good week or bad week. My son just started high school and needed a school uniform. So I had to Afterpay some things for that and try to get a Chromebook. If it wasn't for my mum helping me out, I'd probably be doing more Afterpays to get through," she said.

Under buy now pay later schemes, customers could pay for purchases over several interest-free instalments, side-stepping credit cards and pay-day loans, but users who failed to make repayments were stung with late fees.

The latest figures from credit bureau Centrix show a record 10.5 percent of buy now pay later accounts were in arrears at the end of March.

According to Consumer NZ, just over 25 percent of New Zealanders had a buy now pay later (BNPL) account, a figure that had remained consistent through the last 18 months.

The data showed 20 percent of BNPL users accumulated debt from essentials such as groceries, bills and fuel, while 35 percent paid for services with a credit card, leaving them vulnerable to a second cycle of debt.

When mother-of-three Larissa could not afford groceries like milk, bread and nappies she turned to buy now pay later lender Zip to stock up on family staples at The Warehouse.

The financial juggling act had left her $700 in debt and despondent about living week to week in an effort to feed her children.

"It sucks having to go through all of this every week just to manage," she said.

"You've got to do what you've got to do. I would like to stop using it at some point but that's when I'm in a better financial situation, like my kids aren't in nappies."

(Need help with your debt? Contact Debtfix, New Zealands first debt charity)

Whanganui Budget Advisory Service manager Sandy Fage said families were getting into debt just to survive.

"It's horrendous. I don't know how soul-destroying it must be to be in that position, and then go: 'How do I get some meat for my family?'," she said.

Fage said low-income earners could not always rely on food banks so it was only natural for them to ride out a financial storm with buy now pay later lenders.

Good Shepherd head of microfinance Natalie Vincent said 90 percent of the organisation's loan applicants were buy now pay later users, some of whom had multiple accounts.

"People using buy now pay later to buy essential items like food is telling a troublesome story about the position New Zealand families are in at the moment," she said.

"The debt can become unmanageable quite quickly and spiral out of control, and then it causes all sorts of problems."

Ministry of Business, Innovation and Employment officials were considering draft government regulations for the buy now pay later sector to reduce the risk of people falling into a debt trap.

Under the proposed changes, lenders would have to do robust affordability checks for loans of more than $600, but financial advisers argued the threshold was far too high for people on low-incomes.

Natalie Vincent said any kind of threshold for credit checks was inappropriate.

"At $600 that wouldn't capture our clients or those on limited incomes or with low levels of credit to the buy now pay later service. These are the people who are vulnerable to harm from using a buy now pay later service," she said.

A Zip spokesperson said the company conducted credit checks on all customers and subscribed to an indebtedness indicator that ensured it did not lend to people that were behind on payments to other BNPL lenders.

Customers with overdue payments had their accounts frozen, default fees were capped at $40 and Zip had a hardship policy to help people struggling to make repayments, she said.

A Mad Butcher spokesman said it was up to customers to choose the payment option that best suited them.

Afterpay and The Warehouse did not respond to RNZ's request for comment.