Gateway drug to credit habit
I IT THINK of Afterpay as the financial fin equivalent of marijuana. m
Young people absolutely lo love it, and old people are do doing a lot of finger-waving ab about the dangers of getting ho hooked on the newest fin financial drug to hit the str streets.
This week the financial eq equivalent of a teacher, ASIC, busted into the school locker o rooms (quick, hide the bo bongs!) and attempted to clear the air by holding its first review into the phenomenon that is ‘buy now pay later’, otherwise known as ‘young people’s layby’, otherwise known (by me) as ‘financial weed’.
Here’s some of what ASIC found:
The majority of Afterpay customers are millennials.
One in six of them are in financial strife … getting overdrawn, delaying bills, or borrowing more.
And these services are hotter than Julie Bishop: the number of transactions has risen from 50,000 a month in April 2016 to 1.9 million in June 2018, with the collective tab now at a whopping $900 million plus.
Now, understand there’s nothing really revolutionary about Afterpay — men in grey suits have been dreaming up new ways to get people to spend money they don’t have since long before Bob Marley rolled his first spliff.
This is just the latest incarnation. My opinion? The actual terms on Afterpay are not that bad.
As long as you pay off your instalments on time, you won’t be charged any interest or fees. So, as far as consumer credit drugs go, it’s not too heavy.
Your financial life won’t be ruined by taking out a few Afterpay loans. So chillax, right? Well, no. See, the reason I compare Afterpay to weed is that it acts like a gateway financial drug: it’s effectively training young people to rely on the bank’s money rather than banking on themselves.
Case in point: Afterpay claims their average purchase is $150.
Seriously, if you need instalments to cover $150, you need to check yourself before you wreck yourself.
And, once you get hooked on spending someone else’s money, there’s every chance you might graduate on to harder stuff — other millennial credit-drug dealers who really rip you off.
Seriously, you’re never going to win if you don’t learn to stand on your own two feet and pay your own way.
And that’s why the ‘buy now, pay later’ phenomenon … is true to label.
Get hooked on this junk and you’ll pay a very high price later.
Tread Your Own Path!