Australian online shopping has increased by 24% in the last year and this is partly due to buy-now, pay later providers.

The temptation to make use of these services is understandable – the time spent researching online shopping sites late at night to find exactly what you are after only to be foiled by your bank balance is a frustrating experience. But! Opportunity arises when you see that magic button offering you hope in the form of a partial down payment! These are called buy now, pay later services. They give you the ability to buy items immediately and pay the cost off over time. It’s like Layby except you get to have the item sent to you rather than having to wait until you have paid it off.

ASIC has found that the number of Australians using buy now, pay later has increased from 400,000 to 2 million from 2015 to 2018.
The logic is sound and if you manage to pay off your purchase in time, there is usually no huge impact on your finances. However, as with any situation where you spend money that you don’t have there can be penalties.

Things to keep in mind:

Check the small print - some services incur no fees unless you fail to pay on time. Some may offer you a variety of repayment schedules and fees may be dependent on that schedule. 
There also can be monthly fees.

If you use your credit card as your payment method with the service, you may be charged interest. Interest free periods on credit cards are usually 55 days.

Depending on how much the item is that you want to purchase – the service may not approve the transaction – it depends on the approval process and/or your previous use of the system.

If you are making multiple purchases, it may be worth entering the due dates for each payment in your calendar so you can keep track of them.

Lastly, remember that these services generate their income on customer late fees. Many people can fall in to the trap of forgetting to pay on time.  

While it is a boring message, the old adage applies that if you can’t afford it now, don’t buy it now.

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