Afterpay Alert | A Current Affair Australia

Afterpay Alert | A Current Affair Australia



now it was hailed as the modern-day lay-by but now after pay is getting some consumers into debt with experts warning if you use the service read the fine print first credit cards buy now pay later what more could you want this Christmas Christmas is so expensive and I use it for everything services like after pay have exploded in popularity we now have over two and a half million customers and over 20,000 retailers on the after paper form but Australia's obsession with buy now pay later schemes has alarm bells ringing shoppers have racked up nearly 1 billion dollars in debt and financial experts are warning unless we're careful that could blow out this Christmas it can be a bit of a gateway drug for Millennials in that it gets them hooked on credit it's it's really encouraging them to spend money they don't have it's definitely do the concept is simple instead of paying for something upfront after pay allows people to take a product home and pay for it in for fortnightly installments interest-free it's really easy I've done after babe BEC Jackson has a love-hate relationship with after pay she's constantly using it to buy clothes but it's Lua has landed her in debt on more than one occasion you do kind of forget about it or you forget how much you're owing BEC says because she's not out-of-pocket straight away she'll often make the mistake of putting too many things on earth to pay and then you kind of don't account for it in your budget and you end up getting this like large chunk of money comes out and you're like okay I didn't really prepare for that a recent report from the Australian Securities and Investments Commission has put buy now pay later spending habits under the spotlight it found 40% of people using services earned less than $40,000 a year with one in six customers ending up in financial trouble such as having overdrawn accounts or borrowing money to cover deaths basically spending money that you don't have so it's a delayed way to pay for things and these costs can quickly add up if you don't pay them off so if you Ellsworth he's a personal finance editor at News Corp she says people often get caught out by late fees it's a double whammy if you link you're off to pay two credit cards and fail to pay it off you get hit not only with the fees associated with after pay but you also get hit with interest charges so it ends up being a very expensive way to pay for goods there are now growing calls for services like after pay to be brought under the National Credit Act to tighten controls at the moment businesses aren't required to perform credit checks on customers but Anthony Eisen from after pay says the sector has its own system in place at after pay we reject about 50% of first-time customer users it only serves after us to deal with responsible customers that pay on time the service has introduced a cap on late fees $10 for purchases under 40 and a maximum of $68 the purchases above that and if a customer misses just one single payment they can't spend any more so it's impossible to get into that accumulation and of debt and that revolving nature of debt I love after pay because it just takes the stress out of the shopping michelle lindsay uses after pay all the time she puts money aside specifically for buy now pay later purchases i've been using a for bedding clothing for cosmetics the mother of two has a system in place to make sure she doesn't end up in debt yeah I've got an app so the really good thing is I can go in and check what I've got at one time so if I want anything else I make sure there's no more than two or three things on there at the one time but barefoot investors Scott pipe says not everyone's as sensible as Michelle his new book highlights how young people are especially vulnerable after pay is certainly better than credit cards it's certainly better than personal loans or payday loans but there is a sting in the towel for you people Scott says people need to be very careful their spending habits pre-christmas don't come back to bite them in the new year his advice I'm all about cash is king save up for it and spend it after paid credit cards personal loans can really set you up for a really bad 2019 because you have a February free cap you get the school bills you get all these bills coming up and that's when you really pay if you manage your money really well then I think it can be really beneficial you know if you will ask someone who's not the best at managing your money than yeah it can be really dangerous and you can read the full report from esic on our homepage you

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