Aussies warned to watch out for Buy Now Pay Later traps this Christmas
With Christmas almost two weeks away, many shoppers may be scrambling and doing whatever they can to get their gift shopping done in time, like using Buy Now Pay Later (BNPL) services.
Although these services can ease the financial burden of Christmas shopping by offering interest-free installments, Mozo has reminded Aussies to consider the potential traps of BNPL that can come from overspending or missing repayments.
“It’s important to keep track of your spending and make sure you can afford your purchases. It can be easy to make multiple purchases on the platforms, leaving you with a calendar full of small repayments that can all add up,” said Mozo Director, Kirsty Lamont.
“For example, if you used Buy Now Pay Later to buy $800 worth of Christmas presents in December with your last purchase on Christmas Eve, you could be paying off your presents until 4th February 2021.”
Following an analysis of some of the most popular BNPL services in Australia, Mozo found that late fees can range between $3 to $10 per repayment. Many also charge extra penalties of up to $19.95 for late payments that exceed seven days.
“If you think you might not be able to make your repayments, contact your platform and ask for help. Most providers have a hardship program that is there to help you pay off your debts,” Lamont suggested.
Buy Now Pay Later continues to grow in popularity
Interest-free spending, fortnightly installments and you get your items almost instantly - it’s no wonder BNPL has surged in popularity over the past few years.
In fact, according to Mozo research in May there’s estimated to be 5.8 million BNPL customers across Australia - that equates to 30% of our population.
“These services break up a large purchase into smaller payments, making expensive items more attractive and seem more attainable [and] unlike credit cards, approval can take only a few minutes, allowing shoppers to purchase items almost instantly,” says Lamont.
If you’d like a more detailed look at some of the most popular BNPL platforms in Australia, check out our ultimate BNPL Christmas shopping guide.
Or if you’d like to find out how the average Aussie is using BNPL in 2020, check out our report!