Highlights
- Deb Shroot is a Canberra-based financial counsellor says Buy now pay later says different buy now pay later providers have different conditions with very limited consumer protection.
- Financial counsellor Deb Shroot says people who have committed to multiple repayments under buy now pay later may find themselves unable to secure a bank loan for a house or a car.
- Kirsty Robson, financial counsellor suggests seeking help if you are in a similar situation or finding it difficult to manage your debt.
Interest-free weekly or monthly repayments on things such as a pair of jeans or a smartwatch without signing a huge amount of paperwork is becoming increasingly popular. According to the Australian Securities and Investment Commission, shoppers in Australia spent over $5.6 billion through Buy Now Pay Later providers in 2018-19 when the number of active accounts rose to over six million in the country of 25 million. Fiona Guthrie is the CEO of Financial Counselling Australia. She has been advocating for regulations on these services.
“Your payments are spread over an equal number of weeks that can range from six weeks to many months and even years. You can get buy now, pay later from just a couple of hundred dollars up to about $30,000 and because it sits outside the credit laws there really is no limit on how high that product could be marketed and sold to people," explained Guthrie.
While the interest-free instalments make these services quite attractive for shoppers, they get charged hefty late fees on missing a payment. According to an ASIC report released in November 2020, 21 per cent of buy now pay later consumers missed a payment and incurred late fees in the previous 12 months.
“Financial counsellors at the national debt helpline and around Australia have seen really good results when they are able to advocate for consumers that are struggling with their buy now, pay later. So if you are struggling with your financing with any by now pay later products that you're using, please call the national debt helpline at 1800 007 007.”
You can also find more information on the government’s money smart website.
