This Christmas, will you 'buy now, pay later'?

The festive season is often stressful, as we do our best to purchase the right gifts for our loved ones. Some of us can be tempted to stretch the budget and use credit options, like ‘buy now pay later’ arrangements, to defer payments.

Buy now pay later arrangements are rapidly growing in popularity in Australia. They are considered by many to be the ‘modern day lay-by’, with the key difference being the customer can take their goods home immediately, before paying off their instalments.

A report by the Australian Securities and Investment Commission (ASIC) published this week has found that Australian customers collectively owe $903 million in buy now pay later debt, using platforms like Afterpay and zipPay.

We take a closer look at the findings of this report and share some money management tips to help you relax and enjoy this holiday season.

Buy now pay later in Australia

In its first review of the buy now pay later industry in Australia, ASIC has found that: 

  • Almost one in ten (two million) Australian customers have embraced buy now pay later arrangements to defer their payments on goods and services.
  • The number of customers using these services has increased by 400 per cent from June 2016 to June 2018.
  • Collectively, Australian customers owe $903 million in buy now pay later debt.
  • The number of buy now pay later transactions has risen from 80,000 transactions in April 2016 to 1.9 million in June 2018.
  • One in six customers experience financial difficulties, either becoming overdrawn, delaying bill payments or borrowing additional money, because of a buy now pay later arrangement.
  • While some buy now pay later providers offer fixed term contracts up to 56 days for amounts up to $2,000, other providers offer a line of credit for amounts up to $30,000.
  • Younger customers are most impacted, with 60% of buy now pay later customers being millennials aged between 18 to 34 years.
  • Buy now pay later platforms are not currently regulated under the National Credit Act and therefore are not required to lend responsibly or perform credit checks.

According to ASIC Commissioner Danielle Press, the exponential growth in this industry, along with its associated risks, means that this industry will remain an area of ongoing focus for ASIC.

10 tips to manage your money this Christmas

Showing you care this festive season need not involve lots of cash. Here are our top tips to help you relax and enjoy this holiday season.

1. Stick to a budget

Be mindful of your spending, and only spend within your budget. Use a money management app, like ASIC’s Money Smart TrackMySpend to keep on top of things.

2. Establish the ground rules

Talk with your family about some responsible parameters for gift giving, which still enable you to show that you care. Consider placing a limit on the value of the gift, buying for children only, or a Kris Kringle.

3. Share responsibilities

It can be very expensive to host Christmas lunch. Share the load by delegating responsibilities to others and try not to over cater.

4. Jump online

It can be much more time efficient to find a bargain online, rather than treading the pavement. Search online for discounts, look in sales sections of retailers’ websites, follow your favourite brands on social media to get exclusive discounts.

5. Make a gift

Get creative. Try baking, painting, getting crafty. Give yourself plenty of time to make a unique and highly personal homemade gift.

6. Plan ahead

Avoid the last-minute rush when you’re forced to pay top dollar for a suitable gift. Get organised, give yourself time to find the bargains, and take advantage of free shipping offers for online purchases.

7. Recycle

Reuse wrapping paper, or dip into the recycling bin to repurpose paper scraps. Our younger generation will be thankful in more ways than one.

8. Don’t buy for yourself

Try to avoid the temptation of buying gifts for yourself, when looking for gifts for others. We’ve all done it.

9. Go local

You don’t need to travel to distant, expensive destinations to enjoy a holiday. Consider your local options, where there are often great experiences to be had.

10. Read the fine print

If you still find yourself still wanting more money and you are considering signing up to a buy now pay later platform, or other credit providing service, be sure to read the fine print. Understand the terms and conditions, and when repayments are due.

Remember, the festive season is meant to be cheerful, bringing happiness to all. There are not many things that can reduce happiness and a joyous spirit like debt spiralling out of control.

The team at Bentleys wishes you and your family a joyous and safe festive season, and a prosperous 2019.


Bentleys is a network of independent advisory and accounting firms located throughout Australia, New Zealand and China. We work with aspirational businesses and entrepreneurial people to help them achieve their objectives. Speak with a Bentleys advisor today. We can help you get where you want to be.