Recently, it was reported that Afterpay, one of Australia’s largest buy-now-pay-later (BNPL) providers has sold for $39 billion. Not bad for a company that launched less than seven years ago.
You might be wondering what this has to do with you? Well, if you are one of Afterpay’s 3.4 million active customers, you might be interested in how you have contributed to their incredible success story.
BNPL schemes allow you to buy goods or services, receiving them immediately, and pay them off over time. They don’t charge interest, but they do charge fees, for example if you miss your scheduled payments, and it’s easier than you think to lose track of your purchases.
There are currently ten BNPL providers operating in Australia, with a couple of major new players about to enter the market, all happy to help you spend your cash. According to the Reserve Bank, in the 2019/2020 financial year BNPL providers processed more than $9 billion in payments.
Food for thought (according to an Afterpay April 2021 report):
Depending on the provider used, the size of your purchase, and the amount of time you have to pay, there are a range of fees you might be slugged with:
It’s estimated that as many as 1-in-3 BNPL customers have paid at least one missed payment fee. In some cases, the amount of fees charged on a larger purchase, could be more than you’d pay in interest if you used a credit card, so don’t automatically assume a no-interest option is a smart choice.
BNPL schemes can be very convenient if used wisely but we recommend that you:
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