Mozo research finds 69% of BNPL users settle BNPL debt with credit cards

financial stress

New Mozo research reveals an increasing reliance on credit cards to pay off Buy Now, Pay Later (BNPL) debts among Australian consumers.

According to Mozo’s research, nearly half of all Buy Now, Pay Later (BNPL) users have more than one account and a staggering 69% of BNPL users with credit cards admit to using their cards to settle BNPL debts.

This alarming new trend of using one form of debt to pay off another could lead to a slippery slope of debt spiralling for Aussie shoppers.

The research shows that in 2023, BNPL users who relied on credit cards to meet BNPL repayments accumulated an average debt of $9,387, versus an average of $6,015 for those who didn’t rely on credit cards. 

Mozo's findings also revealed that BNPL users with credit cards tend to have bigger debts overall. The average BNPL debt among all users was $919. However, the figure jumped to $1,059 for those with a credit card, compared to just $725 for those without one.

The average BNPL debt nearing a thousand dollars is a red flag, indicating that many Australians are living beyond their means. It appears that the use of BNPL services coupled with the convenience of credit cards is leading to more of a 'buy now, worry later' mentality.

Mozo spokesperson and personal finance expert Rachel Wastell says, "Buy Now Pay Later is a risky game if you're not on top of it. The way it's being used might put consumers in a mindset of ‘I can afford anything’, and then when emergency expenses pop up - they have to resort to using their credit card to keep up with payments and avoid BNPL late fees.

"I would warn against the risky practice of using credit cards to pay off BNPL debts, especially if you don't clear your credit card balance in full each month,” Wastell said.