The cost of living crisis is now so bad that Australians on six-figure salaries are using Afterpay to buy groceries and petrol because they have maxed out their credit cards, a financial adviser has revealed.
Apps like Afterpay and Zip Pay require the buyer to pay the debt in four equal installments, like the old payment plan.
But if a customer is late paying for the product, they incur steep late fees that can be much more severe than credit card interest rates.
To buy essentials, Australians are using a “buy now, pay later” app to buy Coles and Woolworths gift cards, and those on six-figure salaries are increasingly doing so out of financial desperation.
Consumer Action Law Center acting director of financial advice Claire Tacon said people who had maxed out their credit cards were now turning to buy now, pay later apps to survive.
“After paying the mortgage and other household bills, it wasn’t enough to live on, so to survive, they used buy now, pay later accounts to pay for gift vouchers so they could pay for their groceries and gas,” he told the WhatsNew2Day. Australia.
The cost of living crisis is now so bad that Australians on six-figure salaries are using Afterpay to buy groceries and petrol because they have maxed out their credit cards, a financial adviser has revealed.
Consumer Action Law Center acting director of financial advice Claire Tacon said people who had maxed out their credit cards were now turning to buy now, pay later apps to survive.
‘That’s a very common story we hear now and I think the way people use Afterpay, certainly for our customers, has changed.
“Housing and the fact that people can’t afford essentials is a huge problem.”
Ms Tacon, who has been providing financial advice over the phone for the past nine years, said middle-income people, and not just Centrelink recipients, were now turning to these apps.
“It’s the only way to keep everything afloat,” he said.
‘It used to be that our traditional customer base was made up of people receiving an income from Centrelink; often people who had some misfortune and were struggling simply because Centrelink was not providing them with enough for all their needs.
“Now, we’ve estimated that our calls have increased 25 percent in the last 12 months and that 25 percent are virtually all low- to middle-income workers, often people who have two incomes.”
Alysia Sheppard, a 44-year-old single mother of two teenage children who lives on Sydney’s northern beaches, recently used Afterpay to buy groceries, despite having a base salary of $105,000 as a sales representative and relying on Airtasker to find work. extra doing things. how to clean
“This week is payday and I only have five dollars left,” he told WhatsNew2Day Australia.
‘I don’t have any emergency savings, I don’t have anything in a home deposit account or anything like that.
‘I don’t live a luxurious lifestyle; I don’t buy clothes; I recently had to rely on Afterpay just to buy groceries.
Alysia Sheppard, a 44-year-old single mother of two teenage children (pictured left with Oliver and Harrison) who lives on Sydney’s northern beaches, recently used Afterpay to buy groceries, despite earning a salary of six. numbers and relying on Airtasker to find extra work doing things like cleaning
“Last year, I was working four jobs to try to get by, so I’m making six figures at my main job, but it’s not enough.”
Tacon, which helps struggling consumers in Victoria and Queensland, said people with single incomes were particularly struggling, noting that a couple with a baby earning $72,000 also needed a buy now, pay later account to pay the essential.
“You can’t survive on one income,” he said.
“He was making about $3,000 a fortnight; he had just paid his rent and had $50 left until the next payday and he had a buy now, pay later account.”
With Afterpay, there is a $10 late payment fee plus an additional $7 late payment fee if the debt is still outstanding after seven days.
In November, the Reserve Bank raised interest rates for the 13th time in 18 months, taking the cash rate to a 12-year high of 4.35 per cent.
This has caused monthly mortgage payments to increase by 67 percent as tenants have endured double-digit weekly rent increases with a rental vacancy rate of one percent.