1 in 3 Australians are having money troubles because of booming buy now, pay later

Almost a third of people who use buy now, pay later services (BNPL) are finding themselves in financial trouble, according to new research.

RateCity.com.au surveyed 1,009 Australians to find out what impact these services are having on their personal finances, particularly in light of COVID-19

Here are their findings…

Who’s using BNPL?

• 1 in 3 people have used BNPL (32%).
• More women have used BNPL than men (37% of women compared to 27% of men).
• Half of 18 to 34-year-olds have used Afterpay, Zip Pay or similar.

BNPL can lead to money troubles:

Almost a third of people (28%) who have used BNPL found themselves in money troubles as a result.

This includes:

• 16% of people overstretched the budget leaving them struggling to pay for other expenses.
• 14% have paid a late fee.
• 9% (almost 1 in 10) went into overdraft on their bank account because of BNPL payments.

BNPL causing people to impulse buy:

• More than half of those surveyed (53%) said they are more likely to impulse buy using BNPL.
• Almost 7 out of 10 young Australians said it makes them more likely to impulse buy (68% of 18 to 34-year-olds).
• Women are more likely to impulse buy using BNPL than men (women 57%, men 47%).

BNPL booming in Australia

The buy now, pay later market in Australia is booming, with a growing list of providers now available in Australia.

Dominating the market is Afterpay, with 3.3 million active customers in Australia and NZ and Zip Co with 2.1 million in Australia.

Latitude Pay has 425,000 customers in Australia and NZ.

RateCity.com.au research director Sally Tindall said:

“Every day, thousands of Australians are signing up to these services, all wanting to purchase something now, but delay the pain of actually paying for it.”

“Our research found 28 per cent of buy now, pay later users are getting themselves into money troubles, with some unable to pay their bills as a result,” she said.

“It’s concerning more than half of buy now, pay later users surveyed said these platforms caused them to impulse spend.

“Impulse shopping can put a sinkhole into the best laid savings plans.

“Hit pause before you pay, at least for 24 hours, and if you make a mistake, send your purchase back.

There’s nothing worse than having a bad shopping decision hanging in your closet.

“While buy now, pay later has become the school of hard knocks for some Australians, services such as Afterpay put customers on a much shorter leash than a standard credit card, if they stick to just one platform.

“People that have a number of purchases on the go across several platforms risk losing track of their repayments.

It can easily translate into multiple late fines and, in some cases, overdrawn fees from your bank.

“If you’re applying for a home loan be aware, heavy use of buy now, pay later services could be a red flag and potentially reduce the amount the bank will let you borrow,” she said.

Tips if using buy now, pay later

• Read the terms and conditions.
• Set yourself strict spending limits.
• Don’t impulse buy.
• If you get into trouble, pull the pin.

Key BNPL services available in Australia

(excludes personal loan payment plans)

Source: RateCity.com.au

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