The use of buy-now-pay-later services is putting an increasing number of Aussies in debt, with many unaware of the financial implications of using Afterpay.

With the rise of online shopping has come the rise of buy-now-pay-later services and, less conveniently, an increase in the number of Australians finding themselves in financial trouble.

In a study conducted by Tribeca Financial, many adult participants revealed that they did not know how to budget, failed to pay attention to their debts, and frequently used services such as Afterpay.

Hidden Traps

Although Afterpay appears to make it easier to afford expensive items by allowing consumers to pay them off in installments, the reality is that the price remains the same and in some cases, there can be hidden fees and charges for using the service.

“Afterpay works by splitting the cost of your shop into four equal payments, which are made every fortnight,” Mozo reports. “But if you miss a payment, or don’t have enough money in your account for a direct debit, then you’ll be charged a $10 missed payment fee. If a week goes by and you still have an outstanding balance, you’ll be charged another $7 fee.”

Although Afterpay has recently put a cap on late fees, those who use the app without careful consideration could be faced with additional fees of up to $68. Regardless of what you’ve bought, that’s a whole lot of extra cash that you probably didn’t want to spend!

Use It Wisely

It’s not just Afterpay that is posing a risk to the hip pockets of Australians, with other services like UberEats also to blame for financial stress.

“It’s alarming for people to get into credit debt over insignificant purchases like takeaway food and UberEats,” Tribeca Financial CEO Ryan Watson said. “The debt mounts up, leading to…financial stress for 2 in 5 Australians.”

While research suggests that men are more likely to get themselves into trouble, the arrival of Afterpay and similar methods of payment could spell disaster for anyone who finds themselves making mindless online purchases.

Perhaps it’s worth thinking twice about the reasons for needing to use Afterpay, and assessing whether it is really worth the risk.

Do you use Afterpay regularly? Let us know your thoughts in the comments.

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  • It feels a lot like a credit card to me…Good in the short term but if you don’t meet your obligations it gets expensive…
    I’d prefer to avoid It.

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  • Ironic that services and apps that make our lives easier in the short-term, can hurt you in the long term if you’re not exercising self control or putting boundaries in place.

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  • I haven’t used afterpay before but I have close friends and family who talk about it all the time, they only have good things to say

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  • I have never used After Pay and I really dont think I would as I have a friend that uses it alot and now is caught up with so much to pay fortnightly

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  • I use afterpay A LOT, but i’m smart about it and budget in the repayments with my fortnightly budget. If I cant afford the installments, I will either remove items so I can afford it or just not purchase the product in general.

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  • I’ve never used it but it should be subject to credit controls.

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  • I don’t personally use Afterpay but I can see the appeal for people who are struggling. It can be an useful service for people who can budget.

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  • Afterpay really is awful and encourages people to live beyond their means. If you can’t afford something with the money that you currently have in your account, then save up for it. If you can’t save enough for the item then it is a clear indication that it costs more than you can afford. I know that it is really tempting, particularly in our culture of immediate gratification, but it is a lot less stressful than having the item and then feeling awful for months until you are once again debt free.

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  • Afterpay is convenient if you have control over your funds and aren’t living more than your means. It’s dangerous if you’re spending more than you are earning though and I have seen people suffer in more debt because of their impulsive spending.

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  • not a good option for people out of control with their money

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  • This is a great option for people who know how to budget! You have a limit based on your own spending habits,

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  • I have used afterpay several times and I do not see an issue, unless you are the type to frequently mismanage finances. I always pay on time, if I know money is going to be tight, I don’t buy. I use afterpay at times because even though I have the money to pay upfront, after pay helps me keep to a budget when needed.

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  • It’s not something I’d contemplate. It’s pretty much the same as lay-by except that you get to take it home before it’s paid for.

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  • I’ve never used it and never will. If I can’t afford something, I don’t buy it. I refuse to go into debt or to create ridiculous habits like this.

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  • No never have and I doubt I ever will.

    Reply

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