As the yuletide season approaches, more Aussies turn their eyes to gifts and shopping for mates and families. But be warned, since statistics show that about 60% of Buy Now Pay Later customers struggle to make ends meet.
Christmas is almost synonymous with overindulging as people swarm to shopping centres and eCommerce platforms to buy gifts and goodies for themselves and other people.
But if you don’t want to overspend this season, you can choose BNPL services for physical or online retail purchases. Reports show that Australia has more than 5 million BNPL accounts responsible for up to 20% of eCommerce transactions.
Furthermore, Financial Counselling Australia stated that people who have overcommitted to BNPL debts are bound to financial stress due to the lack of safeguards. That’s because customers can easily access multiple BNPL debts at once, which could accumulate and take as much portion of finances as essentials like utility bills, food, and medications.
Now that Christmas is just around the corner, the season of heavy spending could mean BNPL transactions might lead to a financial hangover once the hype has settled down.
The Rise of Buy Now Pay Later
BNPL is a prevalent payment option for eCommerce platforms and other small purchases in physical stores, from as low as a simple gift up to more than $40,000.
As the BNPL market expands, more customers storm financial counsellors with massive debts. Statistics show that the number of clients with BNPL debts rose to 84% from a meager 31% the past year.
As a result, the federal government proposed reforming the policies and tightening the rules around digital payment systems to regulate BNPL and cryptocurrency transactions.
Why you should not overcommit to BNPL
BNPL services are still in queue for financial regulators and most credit reporting agencies. But Equifax, one of Australia’s leading credit reporting agencies, announced the inclusion of BNPL accounts in credit reports as soon as July 2021.
That means people with massive BNPL debts might struggle to apply for a home loan since it will become a credit liability that you must report during evaluation.
At Plan A Mortgage, we want you to enjoy Christmas and the post-season free from financial hangovers. If you want to know how much a BNPL credit can impact your home loan application, reach out to us at Plan A Mortgage, and we’ll let you know how we can help.
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