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.
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.
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“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!
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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.