Aussie regulatory giant ASIC announced that it would be keeping a close eye on “buy now, pay later” schemes like Afterpay on Friday, which might make you nervous. Fortunately, the good old credit card is always there to fall back on.
Similar to the lay-by of yesteryear, payment platforms like Afterpay allow Aussies to purchase their favourite retail goods (and take them home immediately) for a smidge of the actual cost, with the rest paid off in fortnightly instalments.
But now regulators have their eye on the platform, looking to see whether it is as good as we all think it is.
“ASIC is currently monitoring this industry and engaging with both industry participants and consumer groups,” said ASIC senior executive, Michael Saadat.
“We plan to collect data from buy now, pay later providers in the first quarter of 2018 to determine the size and demographics of the industry and participants, as well as to identify any consumer harms."
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These kinds of payment methods have taken hold in Australia this year. In September, Afterpay announced it was now responsible for processing 20% of total online fashion retail and planned on being in over 4000 physical shop fronts come Christmas.
Part of what makes Afterpay so popular is that it doesn’t charge you any interest for your purchases, just a $10 late payment fee, which grows to $17 if you leave it longer than a week.
While this might seem like a great thing for Aussies who don’t want to pay the full price right away but also can’t stand the thought of costly interest charges, it also means that the company operates outside of credit consumer laws, so it isn’t really regulated.
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But regulated options still exist for savvy shoppers who don’t want to pay the bulk of their Christmas haul upfront. For example, interest free credit cards, when used responsibly, can provide a lot of the same benefits as these buy now, pay later payment options.
“If you’re clever with your credit card payments you can use your piece of plastic for the Christmas shopping haul, making the most of the interest free days that it offers and avoiding new year interest charges on your bill,” said Mozo Director, Kirsty Lamont.
But it isn’t just the interest free aspect of Afterpay that is attractive for Aussies. If you’re keen on having a fixed payment plan to make sure you pay off your spending but would rather stick with plastic, there are options on the market, like the ING Orange One card which features an option to pay for larger purchases via instalments, albeit at a 9.99% interest rate.
Check out a popular bunch of interest free credit cards in the table below or read up on how to best use your credit card for the Christmas shopping spree with our credit cards for shoppers guide.