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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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  • 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.

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  • No, never used afterpay, but recently I bought a juicer from TVSN which I have never bought from before but they had a good deal on what i wanted and let me pay it off by debiting my account each month without any extra charges. Afterpay is better than credit cards that charge interest as long as you do not fall behind on payments.

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  • I don’t have any impulse control with shopping so I am glad I don’t have any of these type of payment plans, I pay upfront or go without

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  • I love Afterpay and use it at times. It is easy to keep on top of payments if you don’t over spend on it.

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  • I’ve never used it – I prefer to buy only what I can afford, or save up for it. I can see people getting into hardship over this ….

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  • It is certainly dangerous and risky getting involved with these type of payment programs.

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  • I’ve never used it, my rule is if you can’t pay don’t get it

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  • I’ve used Afterpay a few times, however because I don’t like having too many bills I ended up paying the items off within the first couple of weeks. It is good for convenience provided you can budget accordingly and only spend what you can afford.

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  • No we never did and never will. It’s about a mindset: you don’t buy anything until you have the money to do so. I teach my kids the same. My 15yr old spent all of this months pocket money already and wanted to borrow money from me for something she desperately wants. I said no you can wait till next month, only buy when you have the money


    • That’s my same philosophy. And it works!

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  • No I don’t! I think it could be bad if I did.

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  • I loved Afterpay when I was working because I could buy big ticket items and pay them off but once I started maternity leave I had to delete my account. I can totally see how I could have got myself into some serious financial troubles if I continued to use it.

    Reply

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