Pros and Cons of ‘Buy Now, Pay Later’ (BNPL)

Australians are now totally engaged with the ‘Buy Now, Pay Later’ (BNPL) method of payment. It is a service where you can buy things that you can’t afford right now, but you can pay for them later. Items will be paid for a period of time through a payment schedule. The repayment schedule usually comes weekly, fortnightly or monthly depending on your choice.

In recent research, they found that 42% of Australians used the BNPL method as payment for what they are buying online and in-store for more than three years. It is more recommended than a credit card since through Buy Now, Pay Later you’re rarely charged for anything extra.

Also, the BNPL process is easier than credit cards. The process is simply purchasing with partner retailers and using BNPL as the mode of payment. Once you provide proof that you’re an Australian citizen, submit ID and bank details, they will approve your order and it is also a confirmation that you have created an account.

While BNPL is emerging as one of the best payment methods due to the number of good reviews about it, you have to be aware of the pros and cons before enjoying the service.

Pros of BNPL

• Convenience. A transaction using the service is very easy and reliable. Just opt to pay with the BNPL provider in the checkout payment method instead of using any credit card. The provider will consider that payment plan and email it to you. Once the account is created, paying using the BNPL service is almost automatic. No need to sign up for anything.
• Interest-free terms. Most Buy Now, Pay Later providers only charge fees for late payments. Once you pay on time, there is no interest fee.
• Easy payment plan. BNPL will be the one to spread out your payment plan. They will split the total amount of your bill into your preferred fortnightly instalments. Payment will be automatically charged from the debit card or credit card you’ve preferred. The only thing that you need to make sure of is you have enough money to settle all the repayments.
  
  

Cons of BNPL

If there are advantages, BNPL also has some downfalls if you don’t use it responsibly.

• Can result in impulsive spending. Since you are allowed to pay for your order when you have the money, you can check out orders whenever you want. It is definitely tempting that you might not notice if you spend only on the things that you really need and afford.
• Additional payment. BNPL providers will automatically charge you fees for late payments. The fee is amounting to $10 for orders under $40 and increases for orders over $40, which may also depend on the BNPL providers.
• Payment schedule. There are BNPL providers who don’t allow consumers to choose their payment schedule. So you have to make sure that you will pay on their assigned schedule. If you want to have your desired payment schedule, look for a provider that allows it.
• Loaning capability. If you’re not a responsible payer, it may affect your ability to apply for other loans such as mortgages, car loans, or even get a credit card in the future.
  
  

Everything comes with discipline

Using the BNPL service is a big responsibility, more so because it involves money. Yes, you can buy anything you want out of whim, but you have to make sure that you can handle the payment and are aware of the risks that come with it. Also, it’s always better to spend wisely!

If you liked our “Pros and Cons of ‘Buy Now, Pay Later’ (BNPL)” and find it useful, check our blogs regularly for more information on how to get out of debt and get updates on apps to help finances in Australia.