Buy Now, Pay Later Debt is still debt!
So back in the day if you didn’t have money for something you would save up, then the trend of using a credit card happened and how much fun was it spending that “free” money, am I right?!
These days it is the way of Buy now Pay latter that is commonly used for purchases or expenses, and whichever way you look at it, it is still debt.
The concept of making a purchase, interest free and then paying for it in instalments over a certain period of time sounds tempting especially when you can take your goodies home and enjoy them straight away.
However, new goodie feeling aside, this method although convenient can be very easy to lose track of how much you are spending and it can be difficult to juggle these repayments alongside your other financial responsibilities.
Buy Now Pay Later Debt
I recently read an article published by ASIC in November 2020 ASIC research into the buy now pay later industry where ASIC found that 1 in 5 people using buy now pay later would cut back on or even went without essentials such meals, and missed or were late paying other bills in order to meet the repayments required on buy now pay later purchases.
Unless you are paying cash for something, any form of buy now pay later is considered the same as a loan or credit cards – debt! Before you think of joining up to any buy now pay later service, consider these things;
Over spending is very easy, and you can find yourself in a position where you are over-committed to spending that you can’t afford
You may not be charged interest but you are charged a fee for the service and if you have more than one buy now pay later service these will add up
Signing up for more than one service can be hard to manage and you could lose track of payments.
This is Still a Debt
As I have said this service is a debt and it might affect any loan application for a car or mortgage as lenders take into consideration any buy now pay later spending.
If you are late in making repayments, they can appear on your credit report which in turn can affect any future borrowing you applied for.
Consider other options such as lay-by it has no account or late fees, and although buy now pay later seems great and is often advertised as “0% interest” or “interest free” they do charge fees and these can add up if you are not aware of them;
If you miss a payment or you are late to pay you could be charged “late fees” of around $5 to $15.
Some services charge a fixed monthly fee of up to $8 as a “monthly account keeping fee”
This one was recently something I personally had no idea about until I received a bill for it – “payment processing fee” this is a fee of around $3 each time you make a payment.
And of course, there is the “establishment fee” not all but some services will charge up to $90 to set the account up.
Also remember you could also pay a fee through your bank if you miss a payment and your account becomes overdrawn, or if you are using a credit card to make the repayment you are then also paying interest.
So dear people, as attractive as the buy now pay later services seem it is best to consider your options and compare services, because it is at the end of the day still debt.