MORE Australians than ever are ditching their credit cards and switching to ‘Buy Now, Pay Later’ schemes to fund their lifestyles, a new report has found.
According to illion’s new Credit Card Nation Report, Australians have opened 1.8 million ‘Buy Now, Pay Later’ accounts in the last four years, taking a sizeable chunk out of the country’s credit card market.
The new forms of payment are proving popular with millennials, with the report finding Australians under the age of 30 control a staggering 53 percent of all ‘Buy Now, Pay Later’ accounts, while holding only 10 percent of all credit cards.
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Buy Now Pay Later schemes are a relatively new form of lay-by, where customers pay off a purchase in instalments after receiving their goods. They pay zero interest, but must pay the item off entirely in a set period, typically about two months.
Contrary to belief, the data also found that men use credit cards more than women, while more women own Buy Now Pay Later accounts than man.
While men represent about 49 per cent of the adult population, they hold 56 per cent of all credit cards, and represent 59 per cent of those who are two months or more behind on their repayments.
In turn, women represent 67 per cent of all BNPL users, suggesting they are more conservative about taking on credit card debt than men, and when they do, are more scrupulous about paying credit off on time to avoid defaulting on their obligations.
illion CEO Simon Bligh said the findings represented a shift in spending power to women and younger Australians.
“While peak oil has yet to occur, this analysis shows we may have reached peak card, as credit card usage in Australia declines at an accelerating pace, particularly with younger consumers,” Mr Bligh said.
“With evolving forms of repayments offering consumers more choice in an increasingly fragmented and competitive credit system, Australia is at the tipping point of its credit card cycle.
“As the market moves towards Buy Now Pay Later schemes, women will take on an increasingly powerful and assertive role in the national economy as they control two-thirds of these accounts.”