The popularity of buy now, pay later services has surged in recent years, with experts claiming a growing number of Australians are now using them to pay for everyday basics such as food and energy bills as the cost-of-living rises.
The Growing Trend of Buy Now Pay Later for Everyday Necessities
The growing trend of buy now pay later for everyday necessities is causing concern among financial experts. An increasing number of people are relying on these services to pay for basic items like food and petrol.
A recent survey of financial counsellors revealed that over 80% of their clients are using buy now pay later for general retail, with 71% using it for food and 41% for petrol.
This misuse of these services, originally intended for occasional purchases, is raising questions about the need for income verification and responsible lending.
Key Takeaways
- More people are turning to Buy Now Pay Later services to cover essential expenses like food, petrol, and utility bills.
- Financial counsellors have observed a significant increase in clients using Buy Now Pay Later for general retail and everyday living expenses.
- Concerns have been raised about the misuse of Buy Now Pay Later services and the ease of access to loans, leading to potential debt accumulation.
- There is a need for income verification, responsible lending obligations, and stricter regulations to protect borrowers and prevent excessive debt.
The Rise in Buy Now Pay Later Usage for Basic Expenses
More and more people are relying on Buy Now Pay Later services to cover their basic expenses such as food and petrol.
According to a survey of financial counsellors, over 80% of their clients are using Buy Now Pay Later for general retail purchases. In fact, 71% of financial counsellors reported clients using the service for buying food, while 41% used it for purchasing petrol. Additionally, almost one-third of financial counsellors noted that their clients were using Buy Now Pay Later for paying utility bills.
This growing trend of using Buy Now Pay Later for everyday necessities is concerning, as it was not originally intended for these types of expenses. The accessibility and rising cost of living pressures contribute to the increased usage.
To address this issue, the federal government has introduced regulations to protect high-risk borrowers, requiring Buy Now Pay Later providers to obtain a credit license and follow minimum standards and hardship requirements.
Concerns Surrounding the Misuse of Buy Now Pay Later Services
The CEO of Financial Counselling Australia expressed concern about the findings surrounding the misuse of Buy Now Pay Later services. The CEO highlighted that Buy Now Pay Later was not intended for everyday living expenses, yet more people are using it for basic necessities such as food and petrol.
A survey conducted among financial counsellors revealed that over 80% of their clients were using Buy Now Pay Later for general retail, with 71% using it for food and 41% for petrol. Additionally, almost one-third of the counsellors reported clients using the services for utility bills.
The ease of access to Buy Now Pay Later loans and the rising cost-of-living pressures were identified as contributing factors to the increased usage.
In response to these concerns, the federal government introduced regulations in May to protect high-risk borrowers. These regulations require Buy Now Pay Later providers to obtain a credit license and adhere to minimum standards and hardship requirements. The government is currently consulting with the industry to finalize the details of these regulations.
The Need for Income Verification and Responsible Lending
The CEO of Financial Counselling Australia emphasized the importance of income verification and credit checks in order to ensure responsible lending practices.
With the increasing use of Buy Now Pay Later services for everyday necessities, it is crucial to establish these verification processes.
By verifying a borrower’s income and conducting credit checks, lenders can better assess their ability to repay the loans. This helps prevent individuals from taking on excessive debt that they may struggle to repay.
Responsible lending practices also involve considering the borrower’s financial situation and ensuring that the loan is suitable for their needs.
These measures are necessary to protect consumers and prevent them from falling into financial hardship.
Impact of Commonwealth Games Cancellation on Victorian Taxpayers
Victorian taxpayers are now grappling with the financial repercussions of the cancellation of the Commonwealth Games. The cancellation of the event has left a significant gap in the state’s budget, with funds that were allocated for hosting the Games now needing to be redirected.
This unexpected change has put a strain on the finances of the state and its taxpayers. The exact extent of the financial impact is yet to be determined, but it is expected to be substantial.
This situation has created a challenging situation for the government as they are now left to find alternative ways to manage the financial shortfall. It remains to be seen how Victorian taxpayers will be affected in the long run and what measures will be implemented to mitigate the financial burden caused by the cancellation of the Commonwealth Games.
Major Bank’s Decision to Discontinue Counter Cash Withdrawals
Customers at selected branches will no longer be able to withdraw cash over the counter, as a major bank recently made the decision to discontinue this service. The bank did not provide specific reasons for this decision or any implications it may have on its customers.
It is unclear whether the discontinuation of counter cash withdrawals is a permanent change or a temporary measure. This decision highlights the ongoing shift towards digital banking and the decreasing reliance on physical cash. With the rise of online banking and mobile payment options, many customers have already transitioned to electronic transactions.
However, this change may inconvenience some customers who prefer to withdraw cash in person. It remains to be seen how this decision will affect the bank’s customer satisfaction and overall banking experience.
Government Regulations to Protect High-Risk Borrowers
Financial Counselling Australia CEO has expressed concern about the findings of increased usage of Buy Now Pay Later services for general retail and the potential risks it poses for high-risk borrowers. The CEO highlighted that Buy Now Pay Later was not originally intended for everyday living expenses. Yet, more people are relying on it for basics like food and petrol.
The survey revealed that over 80% of financial counsellors’ clients were using Buy Now Pay Later for general retail, with 71% using it for food and 41% for petrol. This trend raises concerns about easy access to these loans and rising cost-of-living pressures.
In response, the federal government introduced regulations in May to protect high-risk borrowers. These regulations require Buy Now Pay Later providers to hold a credit license and adhere to minimum standards and hardship requirements. The government is currently consulting with the industry to finalize the details of these regulations.
The Growing Debt Accumulation and the Need for Financial Counseling
Concerns about the increasing reliance on alternative payment methods have raised the need for more accessible financial counseling services. As more people turn to buy now pay later services for everyday necessities, the risk of debt accumulation grows.
Financial Counselling Australia CEO has expressed concern about the misuse of these services, stating that they were not intended for everyday living expenses. The ease of access to buy now pay later loans, combined with rising cost-of-living pressures, has contributed to the increased usage.
To address this issue, the federal government has introduced regulations to protect high-risk borrowers. These regulations require buy now pay later providers to obtain a credit license and adhere to minimum standards and hardship requirements. However, there is still a need for income verification and responsible lending obligations to ensure that debt does not spiral out of control.
Financial counseling services play a crucial role in helping individuals manage their finances and navigate the potential pitfalls of alternative payment methods.
Albion News is a great place to find informative, up-to-date news articles. We provide a wide range of unique articles that offer an interesting perspective on current events from around the world and from various different sources. You can easily search for the topics that matter most to you and explore in-depth pieces that provide insight into the issues and important debates occurring today. Albion News helps you stay informed with carefully researched and credible stories!
