Buy Now, Regret Later? Why Instant Finance Isn’t Always the Answer

Buy Now Pay Later (BNPL) services like Afterpay, Zip, and Humm have become part of everyday spending. Whether it’s a new pair of sneakers, concert tickets, or an unexpected appliance replacement, a few taps and you’re walking out the door without paying upfront. For many, it feels like free money—no interest, no fuss.

But behind the glossy marketing lies a growing concern: what happens when people use these services to paper over financial cracks? When repayments pile up or when paydays don’t quite align? The promise of “instant” convenience often ends up costing more than expected—financially, emotionally, and even socially.

The Real Cost Behind the “No Interest” Hook

Most BNPL providers don’t charge interest—at least not in the traditional sense. But they’ve found other ways to make their money.

Late fees are the main source of revenue. According to ASIC’s 2020 review of BNPL arrangements, over one in five users missed a payment, and late fees alone totalled over $43 million in a single year.

Many users also juggle multiple BNPL accounts, increasing the risk of spiralling repayment obligations that sneakily mimic traditional debt. When customers fall behind, some providers even refer accounts to third-party debt collectors—a surprise for those who assumed “no interest” meant “no consequences.”

The Link Between BNPL and Financial Stress

The Financial Rights Legal Centre has voiced repeated concerns about how BNPL can create a false sense of affordability. When consumers split payments into fortnightly chunks, it’s easy to forget they’ve already committed future income.

An inquiry by the Senate Economics References Committee revealed that BNPL platforms are increasingly used by people on lower incomes, some of whom rely on Centrelink payments. This raises red flags about financial harm, as even a small late fee can trigger further shortfalls.

Financial counsellors report that BNPL debt is now a regular feature in hardship cases, often compounded by credit cards, payday loans, and utility bills. Yet, because BNPL is not traditionally classified as “credit,” many fall into trouble before anyone notices.

Credit Scores, Reporting, and the Illusion of Safety

Here’s a trap many fall into: assuming BNPL won’t affect their credit file. While most providers don’t yet report to major credit bureaus, that’s changing. Some, like Zip, already report repayment history to Equifax and illion.

Missed payments may not hurt today, but they could impact future loan applications—particularly when home loan lenders assess total financial commitments. The illusion of BNPL being “outside the credit system” is gradually disappearing as regulators tighten expectations.

Regulation Is Coming, But Is It Enough?

Until recently, BNPL providers operated in a legal grey zone, exempt from the same checks and balances required of banks or credit card companies. That’s changing. In 2023, the Treasury released its options paper, outlining proposed reforms that include bringing Buy Now, Pay Later (BNPL) under the National Consumer Credit Protection Act.

This means providers would need to conduct affordability assessments, much like lenders do for personal loans and credit cards. But critics argue this should have happened years ago. Until these changes are enforced, the responsibility sits heavily on consumers to self-regulate—a tough ask during a cost-of-living crunch.

Why BNPL Appeals—Even When It’s Risky

There’s no denying the pull. BNPL feels modern, seamless, and painless. It doesn’t carry the stigma of “debt” the way a credit card does. Younger users, especially, find it more accessible—no paperwork, no bank approval.

Retailers love it too. BNPL increases cart sizes, reduces abandoned purchases, and keeps consumers in the spending cycle. It’s designed to feel frictionless, and that’s exactly what makes it risky.

Smarter Spending: What to Consider Before Clicking “Pay Later”

Before choosing BNPL, ask yourself:

• Would I still buy this if I had to pay in full today?
• Do I already have upcoming BNPL payments due?
• Do I have a buffer if I miss a payment or two?
• Have I looked at my bank account’s incoming and outgoing payments this month?

If the answers make you pause, it’s worth stepping back. Short-term convenience should never compromise long-term financial stability.

Financial counsellors (like those from the National Debt Helpline) can also provide free, confidential advice—especially if you feel things are already slipping.

FAQs About Buy Now Pay Later and Instant Finance

Can BNPL affect my credit score?

Yes, some providers like Zip and Openpay report to credit bureaus. If you miss payments, it could impact your ability to get approved for loans in future.

Are BNPL services regulated?

Not fully—yet. The government is planning to bring BNPL under credit laws, but changes are still in progress. For now, it’s less regulated than traditional finance.

Is BNPL cheaper than using a credit card?

It depends. While there’s no interest, late fees can add up fast. Also, credit cards often come with more robust protections under the law, such as chargebacks for faulty goods.

What should I do if I can’t make my BNPL payments?

Contact the provider immediately—many have hardship policies. You can also speak to a financial counsellor through the National Debt Helpline (1800 007 007).

Final Thoughts

Instant finance isn’t bad, and BNPL has a place when used responsibly. But it’s important to see it for what it is—a form of credit, not a loophole. It doesn’t create money; it just delays the pain. And if you’re not careful, it can amplify it.

If you’re leaning on BNPL to get by, that’s not a spending issue—it’s a signal that something deeper in your financial setup needs attention. The sooner you face that, the fewer regrets you’ll have later.