Jesse St Ledger is one of the 5.8 million Australians who use the immediate purchase and subsequent payment platforms.
In recent months, the 20-year-old admits to having bought a little too much.
“The lure is that you don’t have to pay directly, you can make big purchases and worry about the money later,” he said.
“I feel like I used it more recently during isolation, when I have more time to spend in the online store for clothes and other purchases.”
New research conducted in April by comparison site mozo.com.au found that clothing is the most popular purchase to buy now, paying users later for the coronavirus pandemic.
Mozo interviewed a group of 1,017 people who buy now, later paying users at the height of the pandemic to understand their spending habits.
The company discovered that those who normally spent money on luxury items had started channeling that money to buy essential items, such as groceries.
Kirsty Lamont, director of Mozo and money expert, says that more than half of the Afterpay and Zip Pay services surveyed are concerned about their spending habits.
“We have seen that some alarm bells are sounding for Australians’ use of now-paying purchase services later,” she said.
“The problem we are seeing now is that many Australians have lost their jobs or reduced their working hours due to COVID-19 and are now having a very hard time facing these reimbursements to buy now and pay for services later.
“The problem becomes if you are in a situation where you cannot keep up with your repayments, you are in a situation where you can turn to other forms of debt like credit cards which can cause a spiral of debt.”
The survey found that 30% of users are concerned about their overdue accounts.
A whopping 70 percent felt “financially stressed” about the purchases they made.
While one in four has decided to cancel their membership in the past three months.
But for many, it is not an option, the money still owed.
Steve Mickenbecker of Canstar also warned that hidden and late fees could sneak up on consumers.
“Your late fees, if you let them run late, can reach 25%, so $ 200 could earn you $ 50,” he said.
Afterpay and Zip Pay both have difficulty policies that focus on getting in touch with the service as soon as you think you are in trouble.
“The best thing to do is call your purchase now, pay later,” said Ms. Lamont.
They may be able to waive late fees or modify refunds according to your budget.