A concerning trend has emerged in Australia, with millions of individuals grappling with the financial strain of buy now, pay later (BNPL) loans. This issue is adding to the already heightened inflationary pressures faced by households.
New data from Finder, a comparison site, reveals that over 14% of Aussies with BNPL loans are experiencing stress due to their debt. Approximately 11% feel "somewhat burdened," while 3% report an "extremely burdened" state of mind. This equates to a staggering 3 million Australians feeling the pinch from their BNPL commitments.
BNPL has gained immense popularity, especially among millennials and generation Z, who account for 53% and 38% of BNPL users, respectively. However, Finder's personal finance expert, Sarah Megginson, warns that relying on these payment plans can be perilous for households. She emphasizes that when 3 million Australians express concern about their BNPL debt, it's a clear indication that these products are adding pressure rather than providing relief.
Megginson highlights that BNPL stress often builds gradually, making it challenging for consumers to recognize when they are in financial jeopardy. "People underestimate the cumulative effect of multiple small repayments, which can quickly spiral into a serious cash-flow crisis," she explains.
The payment method sees its peak usage during holiday seasons, when shoppers seek to purchase extravagant gifts for loved ones despite limited cash availability. This can lead to additional fees, such as late payment charges, processing fees, and monthly account keeping fees, exacerbating the holiday debt burden.
Some Aussies also utilize BNPL for everyday purchases, leaving them in a week-to-week scramble. Others turn to BNPL when inflation surges, making essential goods less affordable. Post-pandemic inflation, which saw prices rise by 19.1% between the December quarters of 2021 and 2025, has contributed to an increase in BNPL usage.
Inflation is once again on the rise, with a 3.8% increase in the 12 months leading up to December. This could potentially drive more households towards BNPL. Megginson emphasizes the competitive nature of BNPL bills, which must be balanced against rent, groceries, utility bills, and childcare expenses. "This is not just a small group of people struggling; the number of Australians feeling the pressure is growing rapidly, and it's likely to worsen before it improves," she cautions.
In response, the Albanese government introduced new laws in June, bringing products purchased using BNPL under the same regulations as credit cards and personal loans. These laws ensure that Aussies using BNPL for purchases over $2,000 can afford the cost and that sellers hold a credit license.
So, while BNPL offers convenience, it's crucial to consider the potential pitfalls and ensure that it doesn't become a burden. What are your thoughts on the rise of BNPL and its impact on personal finances? Feel free to share your experiences and opinions in the comments!
