Prepare for new buy now pay later rules before next purchase
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If you’ve ever used Afterpay, Zip, Humm, or any of the other Buy Now Pay Later (BNPL) services to spread out the cost of a new appliance, a dental bill, or even a cheeky online shopping spree, you’re not alone.
BNPL has become the third most popular form of credit in Australia, trailing only behind credit cards and home loans.
But as of Tuesday, 10 June 2024, the way these services work—and how they affect your finances—is about to change in a big way.
The Albanese government has introduced new legislation that places buy now, pay later (BNPL) services under the same regulatory framework as credit cards.
This means companies such as Afterpay, Zip, and Humm will now be required to hold an Australian credit licence, follow existing credit laws under the oversight of the Australian Securities and Investments Commission (ASIC), and carry out mandatory checks on a customer’s financial situation—including income and expenses—before granting access to BNPL services.
This also covers low-cost credit contracts for bigger purchases, like solar panels or dental work. In short, BNPL is no longer the 'easy credit' it once was.
BNPL has exploded in popularity, especially among younger Aussies. According to CreditSmart, Millennials make up 38 per cent of BNPL users, and Gen Z another 13 per cent.
But with great popularity comes great responsibility—or at least, it should.
The government is stepping in to prevent people from getting into financial strife with 'easy' credit that can quickly spiral out of control.
Here’s where it starts to hit home: under the new rules, credit checks are now mandatory before you can use BNPL, which may affect your credit score—particularly if you apply for several accounts in a short time.
Missed or late payments can now be recorded on your credit report, similar to how credit cards or loans are treated.
While using BNPL responsibly could help improve your credit profile, especially if you're new to credit, slipping up or taking on too much could harm your chances of securing future loans, credit cards, or even a mortgage.
Elsa Markula, CEO of the Australian Retail Credit Association (ARCA), puts it bluntly: 'Under the new rules, your BNPL behaviour could directly impact your credit score and your future ability to get a loan, a credit card, or even a mortgage.'
To stay on top of your credit health, start by checking your credit report regularly—surprisingly, one in three Australians never have, even though you can request a free copy from each of the three major credit reporting bodies to ensure your details are correct.
Be diligent with repayments, as some BNPL providers report your payment history, which plays a significant role in your credit score; setting reminders or automating payments can help you stay on track.
Avoid applying for credit too often, as multiple applications in a short span can signal financial stress to lenders.
Most importantly, know your limits—only take on what you can comfortably repay because while 'buy now, pay later' might feel convenient, the bills will eventually catch up.
Absolutely! If you use BNPL responsibly, these changes could help you build a stronger credit profile—especially if you’re younger or haven’t used much credit before.
But it’s a double-edged sword: slip up, and it could haunt your finances for years.
While BNPL is most popular with younger Aussies, many over-60s are also using these services for everything from home improvements to medical expenses.
If you’re considering BNPL or already use it, now’s the time to get familiar with your credit report and make sure you’re not putting your financial future at risk.
The days of 'no-strings-attached' BNPL are over. With new regulations in place, it’s more important than ever to be a savvy consumer.
Check your credit, pay on time, and don’t take on more than you can handle.
Have you used BNPL before? Are you worried about how these changes might affect you or your family? Share your experiences and questions in the comments below—we’d love to hear your thoughts and tips.
Read more: Aussie woman warns about 'buy-now-pay-later' schemes: 'It was a shocking wake-up call'
BNPL has become the third most popular form of credit in Australia, trailing only behind credit cards and home loans.
But as of Tuesday, 10 June 2024, the way these services work—and how they affect your finances—is about to change in a big way.
The Albanese government has introduced new legislation that places buy now, pay later (BNPL) services under the same regulatory framework as credit cards.
This means companies such as Afterpay, Zip, and Humm will now be required to hold an Australian credit licence, follow existing credit laws under the oversight of the Australian Securities and Investments Commission (ASIC), and carry out mandatory checks on a customer’s financial situation—including income and expenses—before granting access to BNPL services.
From 11 June 2024, BNPL services will be regulated similarly to credit cards, with providers required to hold a credit licence and comply with ASIC's credit laws. Credit: B4LLS / iStock
This also covers low-cost credit contracts for bigger purchases, like solar panels or dental work. In short, BNPL is no longer the 'easy credit' it once was.
BNPL has exploded in popularity, especially among younger Aussies. According to CreditSmart, Millennials make up 38 per cent of BNPL users, and Gen Z another 13 per cent.
But with great popularity comes great responsibility—or at least, it should.
The government is stepping in to prevent people from getting into financial strife with 'easy' credit that can quickly spiral out of control.
Here’s where it starts to hit home: under the new rules, credit checks are now mandatory before you can use BNPL, which may affect your credit score—particularly if you apply for several accounts in a short time.
Missed or late payments can now be recorded on your credit report, similar to how credit cards or loans are treated.
While using BNPL responsibly could help improve your credit profile, especially if you're new to credit, slipping up or taking on too much could harm your chances of securing future loans, credit cards, or even a mortgage.
Elsa Markula, CEO of the Australian Retail Credit Association (ARCA), puts it bluntly: 'Under the new rules, your BNPL behaviour could directly impact your credit score and your future ability to get a loan, a credit card, or even a mortgage.'
Be diligent with repayments, as some BNPL providers report your payment history, which plays a significant role in your credit score; setting reminders or automating payments can help you stay on track.
Avoid applying for credit too often, as multiple applications in a short span can signal financial stress to lenders.
Most importantly, know your limits—only take on what you can comfortably repay because while 'buy now, pay later' might feel convenient, the bills will eventually catch up.
Absolutely! If you use BNPL responsibly, these changes could help you build a stronger credit profile—especially if you’re younger or haven’t used much credit before.
While BNPL is most popular with younger Aussies, many over-60s are also using these services for everything from home improvements to medical expenses.
If you’re considering BNPL or already use it, now’s the time to get familiar with your credit report and make sure you’re not putting your financial future at risk.
The days of 'no-strings-attached' BNPL are over. With new regulations in place, it’s more important than ever to be a savvy consumer.
Check your credit, pay on time, and don’t take on more than you can handle.
Read more: Aussie woman warns about 'buy-now-pay-later' schemes: 'It was a shocking wake-up call'
