Buy Now Pay Later (BNPL) services, like Afterpay, Zip, and Humm, have surged in popularity across Australia.
They allow consumers to take home goods or pay for services immediately while spreading the cost over smaller instalments. Based on government data, the number of Australians using BNPL services went from 400,000 in 2015 to over 7 million in recent years*.
BNPL Services and the New Legislation
Historically, BNPL services operated outside the strict regulations governing other credit products, like credit cards and personal loans. This has led to financial difficulties for some Australians, particularly those juggling multiple BNPL accounts.
To address these issues, the Australian Government has introduced changes to regulate BNPL under the National Consumer Credit Protection Act. From 10 June 2025, BNPL providers must adhere to the same rules as credit card and loan providers. These changes aim to protect consumers while preserving the convenience BNPL services offer.
Key Changes Under the New Legislation
How BNPL Affects Your Financial Health
While the new regulations bring greater accountability, it’s still up to individuals to use BNPL responsibly. BNPL services can have a significant impact on your financial health, both positively and negatively.
Credit Checks and BNPL Accounts
When you apply for a BNPL account, the provider will perform a credit check. This involves reviewing your credit report to assess your borrowing history, including how you’ve managed loans, credit cards, and other debts. If you’ve missed payments or defaulted on past debts, it could affect your approval.
Even after approval, how you use BNPL can impact your credit report. Late payments, accumulating debt, or using BNPL excessively may make lenders view you as a higher-risk borrower. This could affect your ability to secure future loans or credit cards.
The Costs of BNPL
BNPL services are often marketed as interest-free, but this doesn’t mean they are free of cost. Here’s what you need to know about potential expenses:
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Late Fees: If you miss a payment, most BNPL providers charge late fees. These fees can add up quickly, especially if payments are repeatedly missed.
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Credit Card Fees: If you link your BNPL account to a credit card and fail to pay off your credit card balance in full, you may incur interest charges from your credit card provider.
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Overcommitting: With easy access to multiple BNPL accounts, it’s easy to lose track of repayments, potentially leading to financial stress.
Tips for Responsible BNPL Usage
To avoid financial pitfalls and maintain good credit health, it’s crucial to use BNPL services wisely.
Before making a purchase, consider whether you can comfortably manage the repayments alongside your other financial obligations. If the answer is no, it’s better to wait or explore alternative options. Set up automatic payments or reminders to ensure you never miss a due date. This helps you avoid late fees and protects your credit report from negative marks. While it’s tempting to sign up for multiple BNPL services, having too many accounts can complicate your financial situation. Stick to one or two accounts and keep track of repayment schedules to stay organised. Using a debit card ensures that you aren’t just swapping the BNPL debt for higher cost credit card debt when your payments are taken out.. This can help you avoid interest charges and minimise financial risks. Create a budget that includes all your expenses, including BNPL repayments. Tracking your spending will help you identify areas where you can cut back and ensure you’re not overextending yourself financially. If you’re struggling to keep up with repayments, reach out to your BNPL provider. Most offer financial hardship assistance programs designed to help customers get back on track.
The Bottom Line: Why Good Credit Matters
Buy Now Pay Later services offer convenience and flexibility, but they also come with responsibilities. A healthy credit report is crucial for securing future financial opportunities, such as loans, credit cards, or even rental agreements. Misusing BNPL services—through missed payments or over-committing—can harm your credit and limit these opportunities.
With new regulations on the horizon, consumers will benefit from greater protections, but the principles of responsible credit use remain the same:
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Only borrow what you can afford to repay.
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Pay on time to avoid fees and protect your credit history.
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Use BNPL services sparingly and keep track of your overall financial commitments.
When managed wisely, BNPL can be a helpful tool to manage purchases without compromising your financial health. By understanding the risks, staying informed, and using BNPL responsibly, you can safeguard your financial health while enjoying the benefits of flexible payment options.