Are you unknowingly damaging your wallet by paying bills with Afterpay?
- Replies 4
These days, many are pretty strapped for cash. Even with the hard work and dedication people put in to earn a living, it can be a struggle to make ends meet.
Folks over at Google recently released some disconcerting data, showing that the second most popular search query in regards to bills was, 'Can I pay for bills with Afterpay?' followed very closely by, 'Can I pay for groceries with Afterpay?'.
Sadly, it appears that more and more Australians are turning to buy-now-pay-later (BNPL) services like Afterpay for basic necessities like food and utilities, in an attempt to meet their financial commitments.
You’ve probably heard of Afterpay—it’s a BNPL service that lets users purchase something and make instalments, usually without a credit check.
It’s associated with non-essential spending, such as clothing, entertainment, technology and travel items. However, it seems that Afterpay is now being leveraged to pay groceries and bills due to financial stress for many Aussies.
The cash rate has officially increased by 4.25 per cent in the last 18 months to 4.35 per cent, placing tremendous stress on mortgage repayments.
As Compare Club's biannual Bill Stress Index observed, it’s no longer just mortgage repayments causing financial stress. As many as 47 per cent of households are anxious about affording regular utility bills, including electricity, water, internet and gas expenses, a rise from 23.4 per cent in May.
In July, the Australian Energy Regulator had an increase in power bills, while in the supermarkets, data from the Australian Bureau of Statistics indicates that bread and cereal prices went up to 8.5 per cent and dairy by 7.8 per cent since October 2022.
Meanwhile, people on social media have been sharing footage of a 2017 Coles advertisement that showed how to 'feed the family for $10' with a meal, and how the same offering now sets you back over $24 in 2023.
According to Foodbank's Hunger Report 2023, the number of households struggling to access food security has increased which is why some people are looking to use Afterpay to bring food to the table.
‘The fastest-growing cohort of people coming our way are people that have never needed our help before,’ said Matt Tilley, Foodbank Australia's Chief Communications Officer.
‘Throughout 2023, 3 million households went from experiencing food stability to short-term food instability.’
The cost-of-living crisis was the main reason for food insecurity for 79 per cent, which ‘affects the emotional relationships inside families’.
The good news is that help is available to those in need. Tilley says that there’s no need to feel ashamed about your situation and that their services are available to those who are faced with food insecurity.
What’s more, Foodbank Australia is also running evening and weekend markets to get food to those who need it at times that are convenient for working people. To find out where the nearest markets are, or to donate to the charity, simply visit the Foodbank website.
Services like Afterpay may seem like a convenient solution, especially in the short term. But financial advisors warn against it.
Even though no credit check is required to use BNPL, they argue that having an account can still negatively impact your credit score and your ability to access credit in the future.
Moreover, accessing BNPL is what’s known as an ‘illusion of resources’, as the distance between the act of spending and the consequences can lead to heavy debt and spiralling costs down the track.
According to Kate Brown, Head of Research at Compare Club, bill smoothing is also useful for managing costly bills, as this method uses predicted usage rates to spread payments evenly throughout the year so that you’re not hit with hefty fees all at once.
The key message here is that, if you’re feeling the financial strain, use the help available to you. Turning to services like Afterpay should only occur if you’re confident you can repay without penalty in the near future.
If you’re having problems with making payments, it’s important that you reach out to the National Debt Helpline for free advice and counselling. This service is available between 9.30 am and 4.30 pm Monday to Friday, and you can call them on 1800 007 007.
What do you think of this story? Have you thought about using Afterpay? Let us know in the comments below!
Folks over at Google recently released some disconcerting data, showing that the second most popular search query in regards to bills was, 'Can I pay for bills with Afterpay?' followed very closely by, 'Can I pay for groceries with Afterpay?'.
Sadly, it appears that more and more Australians are turning to buy-now-pay-later (BNPL) services like Afterpay for basic necessities like food and utilities, in an attempt to meet their financial commitments.
You’ve probably heard of Afterpay—it’s a BNPL service that lets users purchase something and make instalments, usually without a credit check.
Some Aussies are turning to BNPL services to pay for their utility bills or daily necessities. Image: Pexels
It’s associated with non-essential spending, such as clothing, entertainment, technology and travel items. However, it seems that Afterpay is now being leveraged to pay groceries and bills due to financial stress for many Aussies.
The cash rate has officially increased by 4.25 per cent in the last 18 months to 4.35 per cent, placing tremendous stress on mortgage repayments.
As Compare Club's biannual Bill Stress Index observed, it’s no longer just mortgage repayments causing financial stress. As many as 47 per cent of households are anxious about affording regular utility bills, including electricity, water, internet and gas expenses, a rise from 23.4 per cent in May.
In July, the Australian Energy Regulator had an increase in power bills, while in the supermarkets, data from the Australian Bureau of Statistics indicates that bread and cereal prices went up to 8.5 per cent and dairy by 7.8 per cent since October 2022.
Meanwhile, people on social media have been sharing footage of a 2017 Coles advertisement that showed how to 'feed the family for $10' with a meal, and how the same offering now sets you back over $24 in 2023.
According to Foodbank's Hunger Report 2023, the number of households struggling to access food security has increased which is why some people are looking to use Afterpay to bring food to the table.
‘The fastest-growing cohort of people coming our way are people that have never needed our help before,’ said Matt Tilley, Foodbank Australia's Chief Communications Officer.
‘Throughout 2023, 3 million households went from experiencing food stability to short-term food instability.’
The cost-of-living crisis was the main reason for food insecurity for 79 per cent, which ‘affects the emotional relationships inside families’.
The good news is that help is available to those in need. Tilley says that there’s no need to feel ashamed about your situation and that their services are available to those who are faced with food insecurity.
What’s more, Foodbank Australia is also running evening and weekend markets to get food to those who need it at times that are convenient for working people. To find out where the nearest markets are, or to donate to the charity, simply visit the Foodbank website.
Services like Afterpay may seem like a convenient solution, especially in the short term. But financial advisors warn against it.
Even though no credit check is required to use BNPL, they argue that having an account can still negatively impact your credit score and your ability to access credit in the future.
Moreover, accessing BNPL is what’s known as an ‘illusion of resources’, as the distance between the act of spending and the consequences can lead to heavy debt and spiralling costs down the track.
According to Kate Brown, Head of Research at Compare Club, bill smoothing is also useful for managing costly bills, as this method uses predicted usage rates to spread payments evenly throughout the year so that you’re not hit with hefty fees all at once.
The key message here is that, if you’re feeling the financial strain, use the help available to you. Turning to services like Afterpay should only occur if you’re confident you can repay without penalty in the near future.
If you’re having problems with making payments, it’s important that you reach out to the National Debt Helpline for free advice and counselling. This service is available between 9.30 am and 4.30 pm Monday to Friday, and you can call them on 1800 007 007.
What do you think of this story? Have you thought about using Afterpay? Let us know in the comments below!
.png){kind=icon}
