Earlier in the year, we explained the concept of ‘Buy Now, Pay Later’ services – a payment option that allows you to purchase a product in store or online without paying for it immediately.
One of the platforms, Afterpay, has now expanded into travel services.
This means their customers will pay for their holidays in a series of interest-free instalments prior to their departure date. The attraction is in the idea of a luxurious holiday that is paid for in weekly or fortnightly installments, rather than one lump sum in the beginning.
Although many people find that this model works for them, there are some potential risks.
Since the majority of AfterPay users are aged between 18-34, they may not have the financial knowledge or experience to realise what they are committing themselves to. AfterPay exploits a loophole in the national credit laws to forego a credit check before consumers can use its service. As such, many Australians may be unaware of their financial situation, and thus overcommitting to an AfterPay holiday without truly knowing what they will be liable for.
Furthermore, this controversial scheme thrives off interest charges and hidden fees, making approximately $28.4 million from late fees alone. Despite often being advertised as ‘interest free’, if you don’t make your repayments on time, the fees can accumulate to large sums. It all adds up incrementally and can become very overwhelming, especially if you have just splurged on a holiday.
If you would like to learn more about your options to deal with unmanageable debt, contact our friendly and professional debt advisors at Debt Free Australia for a FREE debt assessment. Call us on our 24/7 debt advice line on 1800 676 598.