Credit cards out of favour, as BNPL debt soars

RACQ Bank has warned Queenslanders against signing up for debt in sheep’s clothing as the nation’s credit card bill plunged.

Bank spokesperson Lucinda Ross said while the nation’s change in attitude towards credit cards should be applauded, Aussies were still accruing large amounts of debt with buy now, pay later lenders.

“It’s fantastic to hear we’ve wiped $4.2 billion off our national credit card bill since COVID-19 hit, but unfortunately we’ve seen a huge rise in popularity of buy now, pay later (BNPL) lenders,” Ms Ross said.

“While these lenders can seem more attractive because they don’t charge interest rates, any time you’re having to pay for an item after you’ve received it, you’re accruing debt.

“Don’t let any clever marketing or spin convince you otherwise, and make sure you’re only signing up for debt you can honestly afford.”

Ms Ross said shoppers should implement the simple ‘pause’ strategy before they made non-essential purchases.

“Make sure to stop, pause and ask yourself if you can’t afford paying for this now and it’s not essential, can it wait?” she said.

“This pause strategy can mean the difference between short term gratification and long term financial wellness.”

To find out more about managing debt, visit RACQ’s Financial Wellbeing Hub.