Still shopping for Christmas? Or getting ready for the January sales? It’s so easy to shop with buy now pay later (BNPL), with so many options to pay for fashion, food and everything in between.
But the simplicity of BNPL also makes it easy to shop first, think later – then regret how much you’ve spent.
In fact, more than two in five Australians (41%) regret a purchase they’ve made on their BNPL account, according to new research from top comparison site Finder.
That’s 5.49 million Aussies who have felt buyer’s remorse after paying for something with BNPL.
BNPL is often compared with credit cards, and Finder’s research also found 52% of credit card holders regret a purchase made with their card.
But BNPL is not regulated in the same way as cards and other credit products (yet), which can mean a bigger risk of impulsive spending.
Here, Finder's senior credit card writer Amy Bradney-George lists her top five tips to help you avoid BNPL regrets and get debt under control.
1. Ask yourself “would I buy this with cash?”
This is a good way to check whether you’d make a purchase if you didn’t have access to BNPL.
If you couldn’t afford to pay for something in full, there's a risk that you wouldn’t be able to afford repayments without some financial stress. And regret is a lot more likely if you don’t think you’d buy something without the option of BNPL.
2. Factor in other bills
A BNPL account won’t remind you about bills and other household costs before you buy something new. But taking a moment to think about these expenses can help you decide if buying now and paying later makes sense.
For example, if you know you need to spend a lot on bills in the next few weeks – or you already owe a lot on BNPL – it might be wise to hold off on any BNPL purchases that are not essential.
3. Check the fees
While BNPL might not charge interest, most accounts have some fees and charges. Even if you’ve had your account for years, it’s important to check the potential costs.
This can include establishment fees, monthly account fees and late payment fees.
Finder research has found that around 1 in 10 Australians (10%) end up with late payment fees for BNPL, so even if you think you’ll be able to meet the payments it is important to be aware of the cost.
4. Focus on paying off BNPL balances before spending more
If you have BNPL debt, avoid using it for new purchases until you’ve paid it off. For a single balance, this could be as simple as waiting until all the scheduled payments are made. Or paying extra when you can afford it.
If you are struggling to make repayments or have BNPL debt across a few accounts, one option is to consider debt consolidation with a personal loan. This would let you roll the balances onto a single loan account that you would repay over a set period of time – which can make it easier to manage.
5. Ask for help
Most BNPL brands offer hardship assistance if you need to pause or reduce your payments due to a change in your circumstances (such as job loss or sickness).
What are the biggest BNPL regrets?
The Finder survey of 1,063 respondents – 702 BNPL users – found that purchasing clothing, shoes and accessories with BNPL was the most common regret (12%).
Electronics (4%) was the second most common category of BNPL spending that Aussies regret.
Jewellery, entertainment, gambling, holidays and collector’s items (3%) round out the seven most common BNPL purchases that are later regretted.
The survey also found young Aussies were more likely than older generations to have regretted a purchase made using BNPL. More than half (60%) of gen Z wished they hadn’t splurged compared to 20% of baby boomers.
As the cost of living continues to creep upwards, some Aussies have also been adding extra BNPL accounts to help spread costs out.
These can be useful tools to have when it comes to the sale season but relying on BNPL can quickly become unmanageable. Not to mention expensive if you end up with late payment fees or other account costs.
You can also speak to a financial counsellor for free by calling the National Debt Helpline on 1800 007 007 or through the online chat service.