Christmas is fast approaching and there is a good chance that you have started turning your attention to presents for family and friends. But be careful this Christmas – more than half of Buy Now Pay Later (BNPL) customers are struggling to pay day-to-day living expenses.

One temptation to avoid indulging in is BNPL services such as Afterpay and Zip.

There are more than 5 million active BNPL accounts in Australia, which makes up about 20% of online retail transactions. And a report by Financial Counselling Australia has revealed that BNPL debt is causing significant financial stress to users who have overcommitted to the products.

The BNPL report titled “It’s credit, it causes harm and we need safeguards”, shows that 61% of financial counsellors say most or all of their clients with BNPL debt are struggling to pay their day-to-day living expenses.

BNPL could leave people with a financial hangover come January.

The emergence of the BNPL market

BNPL can be used for small purchases such as a pair of shoes, a night out, to larger purchases up to $30,000 for cosmetic surgery or solar panels for the house.

As the market grows, more and more people are using BNPL. 84% of financial counsellors who were surveyed said that about half, most or all their clients have presented with BNPL debt. This is compared to 31% a year ago.

Other important reasons not to overcommit to BNPL

Whilst financial regulators and credit reporting agencies have been caught by BNPL, one of the three main credit reporting agencies in Australia, Equifax, recently announced that BNPL accounts and transactions will be included in credit reports from the 24th of July 2021.  And most, if not all lenders, will pay attention to whether someone uses BNPL services when they are being assessed for a home loan application. This is because BNPL is still a credit liability that needs to be disclosed when applying for a home loan.

If you have any doubts about whether a BNPL purchase might affect your ability to secure a home loan, or pay off an existing one, get in touch with Zippy Financial today!

Phone: 1300 855 022              Email:

Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.

About the author:

Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.

Connect with Louisa on Linkedin.

Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).

Disclaimer:This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.