Buy today, pay tomorrow. It sounds attractive, and it can be very convenient. But new research sheds light on the potential traps.

‘Buy now, pay later’ (BNPL) is the deferred payment option that lets you take purchases home today and pay them off over a series of instalments.

Interest isn’t usually charged on BNPL purchases, so if you can handle the repayments and stay within budget for purchases, it can be a handy option.

Late fees apply if you miss a payment, and the danger zone can occur when users have a number of purchases on the go across several platforms. That can make it a lot harder to keep track of repayments, potentially leading to late fines and, in some cases, being slugged by overdrawn fees.

BNPL takes off among Millennials
For all that BNPL is attracting lots of interest, it’s not quite the game-changer it may seem to be. A study by industry super fund-owned ME Bank found credit cards are still the main consumer payment method after cash.

However, it’s among Millennials that BNPL has taken off.  A 2018 investigation by money watchdog ASIC, found 60% of BNPL users are aged 18 to 34 years old[1], and plenty are finding it easy to fall into the trap of overspending.

Tips for using BNPL
BNPL is here to stay – and it can be very handy. If you’re thinking about signing up to a platform, be sure to read the terms and conditions carefully.

Keep things simple by only dealing with one platform, and set strict spending limits, giving yourself breathing space before giving in to an impulse buy. Ideally, stick to a debit card when shopping. It’s hard to get into too much trouble when you’re using your own money.

Members Equity Bank Limited ABN 56 070 887 679 AFSL and Australian Credit Licence 229500.


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