Buy now, regret later? RACQ issues spending warning

RACQ has urged Queenslanders to exercise caution when using buy now pay later (BNPL) options, after a new survey revealed many shoppers struggled to make the repayments.

Club spokesperson Lucinda Ross said new research by RACQ Bank found almost 40 percent of Queenslanders surveyed had used a BNPL option, with 16 percent admitting they found it difficult to pay it back.

“Buy now, pay later services like AfterPay and Zip have soared in popularity in recent years with almost a third of Queenslanders surveyed telling us they were likely to use one of these options in the future,” Ms Ross said.

“Another trend we’ve uncovered is almost 10 percent of those surveyed said they’d used a pay day loan, which is basically short-term credit to help get you through until your next pay cheque. Concerningly, almost 60 percent of those using this product said they struggled to pay it back.”

Ms Ross said with any financial decision it was crucial to do research and understand the fine print before committing.

“Some buy now, pay later options have no interest fees and no charges unless you miss a repayment, but if you do miss one you could be slugged with a huge fee,” she said.

“It’s also important to know when the automatic payments will be taken. Some users have been stung with overdraft fees from their bank when the money was deducted and they didn’t have enough in their account.

“The best way to avoid getting into trouble is to use your own cash or savings whenever possible. If you don’t have the money, before committing to a purchase using buy now, pay later ask yourself: ‘if I can’t afford to pay for it now, will I be able to pay for it later?’”

Ms Ross said before Queenslanders used BNPL or credit options, take time to assess the product and your budget.

“Look at how much you earn, where your money is going and how much it’s essential spending. Then consider an online budget planner, like RACQ’s, to keep track of your finances.”

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.