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Buying a home

‘Buy now, pay later’: Why it’s still debt

26 May 2020

‘Buy now, pay later’ programs are popular among credit-averse young people. But despite their benefits, these payment plans are still debt – and debt comes with risk.

What is ‘buy now, pay later’

‘Buy now, pay later’ options are offered at checkout when you shop online with participating retailers. If you choose ‘buy now, pay later’, you’ll pay in instalments instead of paying on the spot. These programs are interest-free, so they’re especially appealing to the cash-tight and credit-wary.

If used carefully, ‘buy now, pay later’ programs can be tools of convenience. They feature low customer fees and a fast setup process, so you can easily spread your costs.

But don’t forget, ‘buy now, pay later’ purchases are still debt.

Why it’s still debt

‘Buy now, pay later’ is a form of credit. It may look different from traditional lines of credit – with its low fees and lack of credit checks – but it’s credit nonetheless. Credit isn’t bad per se–it can be useful for managing a pile of expenses. It’s only dangerous if people go overboard, or don’t understand the conditions.

With ‘buy now, pay later’ programs, it can be easy to lose track of your bills, especially if you have several accounts running. The ease of buying now and paying later may also trigger impulse spending. Those designer clothes or expensive shoes suddenly seem more affordable when the price is split into bite-sized instalments. So, before you make that purchase, ask yourself: ‘’can I really afford it?’’ Or maybe more importantly, ‘’do I really need it?’’.

Mind those late payment fees too! If you’re not on top of your instalments, you may end up owing more than you expected.

If money is tight, and you’re looking for ways to save for that special something, the Suncorp App has a tool for that. The in-app Dollar Tracker automatically sorts your spending into categories like food, utilities and entertainment. This way you’ll get insights into your spending with the click of a button. Eligible customers will also have access to various in-app discounts on fuel, groceries and many other everyday essentials in-app!

The Suncorp App is available to AAMI, GIO, Bingle, Shannons, APIA, CIL, as well as Suncorp Bank and Insurance customers.

Download the Suncorp App

How ‘buy now, pay later’ can affect your home loan

Most lenders observe your discretionary spending when judging your risk profile as a borrower. And ‘buy now, pay later’ purchases are usually classified as discretionary spending. If you use these services often, some lenders may get the impression that you’re living paycheck to paycheck. This can look even worse if you have many late or missed payments.

But don’t panic! Using these programs won’t automatically harm your likelihood of having a loan approved. Living within your means and maintaining a good credit score are the main things lenders look for.

If you’re thinking of borrowing but are unsure where you stand, chat to a Suncorp Mobile Lender.

Talk to a Suncorp mobile lender

Using ‘buy now, pay later’ safely

Always make sure you have enough funds in your account at payment time. And if you’re applying for a home loan, try to pay off these bills before putting your application in, preferably three months in advance.

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Our experienced team are happy to answer all your questions, no matter how big or small. We’ll reach out to you within 24 hours to chat through your home lending questions.

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Insurance is issued by AAI Limited ABN 48 005 297 807 trading as Suncorp Insurance. Consider the Product Disclosure Statement before making a decision about this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.


Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Information Document before making any decisions about whether to acquire a product.

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