Miss a payment, however, and on a small balance you’ll find the impact of these fees can pack a punch.

Myth 4 Buy Now, Pay Later is better than a credit card Depends: Both are a form of credit

If you were to compare which is cheaper – a credit card or a BNPL platform, then BNPL would, in general, win hands down. No interest and in most cases no ongoing fees. Miss a payment, however, and on a small balance you’ll find that the impact of these fees can pack a punch. The problem of course with either of these two facilities comes down to whether or not you are using them for mindless spending.

These days you can BNPL just about everything from beer to lipstick to holidays. The catch with mindless spending is that it prevents you building real wealth. Red flags to watch for include multiple accounts (BNPL or credit cards), living from pay to pay, missing payments, not being able to save because you’re spending.

ASIC’s research indicated that 21% of BNPL users missed a payment in the 12-month period prior to the report. Of those customers who missed payments due to their BNPL use, ASIC found 44% also missed regular household bills, 32% missed credit card repayments and 22% missed their mortgage repayments. AWW Tip:

Set up your own Buy Now, Pay Later account. Pop $1000 in it and then pay yourself back in four equal instalments. Chances are you won’t shop as much as it’s also harder to part with your cash.