Buy Now, Pay Later

The contents provided on this page are for informational purposes only and do not constitute financial advice. Consider your personal circumstances and objectives before making any financial decisions.

 

Buy Now, Pay Later (BNPL) has exploded in popularity across Australia, becoming a go-to payment method at both major retailers and smaller online stores. With the promise of interest-free instalments and easy checkout processes, it’s easy to see the appeal. But what seems like a smarter way to pay can sometimes lead to a cycle of spending beyond your means.

This article breaks down how BNPL works, the pros and cons, and when it might be better to consider a more cash-based approach like a pay advance product instead.

What is Buy Now, Pay Later?

BNPL lets you buy a product or service today and pay for it in a series of smaller instalments — usually four payments spread over six weeks. These services are often integrated directly into checkout pages online or in-store.

Popular BNPL providers in Australia include:

  • Afterpay
  • Zip Pay
  • Klarna
  • Humm
  • LatitudePay

The model is especially appealing to younger consumers who might not qualify for traditional credit cards or who want to avoid interest. However, the convenience can make it easy to overextend your budget.

How BNPL works

When you select BNPL at checkout, you typically can purchase an item straight away and spread out the cost over time (typically a number of weeks). 

If you pay late or miss a payment, late fees typically apply, and sometimes other fees such as collection fees, bill transaction fees and dishonour fees. If not addressed, these fees can snowball quickly.

Some services might also offer longer-term repayment options for bigger-ticket items, which can come with interest and begin to resemble more traditional loans.

Pros of BNPL

  • Interest-free (if paid on time): As long as you meet your repayment schedule, you typically won’t pay interest.
  • Quick and easy approval: No lengthy credit applications — just a few clicks.
  • Budgeting tool: Helps break up larger purchases into manageable chunks.

Cons of BNPL

  • Easy to overcommit: Because the upfront cost is lower, you may end up spending more than you can afford.
  • Late fees add up: Missed payments can result in multiple fees across different services.
  • Multiple providers can create confusion and difficulty keeping track: Many people juggle multiple BNPL accounts, which complicates tracking due dates.
  • Potential credit impact: Some services report missed payments to credit bureaus, meaning BNPL services can potentially affect your credit score.

When BNPL might work well

BNPL can be a helpful tool for:

  • Planned purchases: Like a new fridge or school supplies, when you’ve already budgeted the full amount.
  • Spreading the cost of big-ticket items: For example, buying a new mattress or tech upgrade and paying it off in manageable instalments.
  • Managing seasonal expenses: Like buying school uniforms, holiday gifts, or back-to-school gear — bigger purchases that happen once a year.

The key is making sure it’s a financial choice — not a reaction to impulsive spending or a lack of emergency savings.

When BNPL can become a problem

Issues can arise when:

  • You’re using BNPL to fund everyday living costs
  • You start stacking purchases across multiple platforms
  • You lose track of repayment dates and incur multiple late fees

It’s important to treat BNPL like any other form of credit. Just because it's marketed as easy doesn’t mean it’s without consequences.

BNPL alternative: Choose cash, not products 

One of the key differences between BNPL and a pay advance product like Beforepay is the outcome:

  • With BNPL, you typically get goods or services now, and manage repayments later. 
  • With pay advance products, like Beforepay, you typically can access cash now, and manage repayments later. 

If your need is financial — rent, groceries, transport — BNPL won’t help. Alternatively, you could also consider borrowing cash upfront like online pay advances with Beforepay to pay for the goods or services that you need now. 

How is Beforepay Pay Advance different from BNPL?

  • Access up to $2,000 with a flat 5% fee – no late fees or other costs.
  • Use the funds however you choose — it’s cash, not credit tied to a retailer.
  • Smart repayment plans tailored to your pay cycle.
  • One loan at a time to avoid overborrowing.

Beforepay supports real-life expenses and gives you more control over how and where you use the money.

Final thoughts

BNPL is here to stay, and when used responsibly, it can be a helpful way to spread out certain costs. But it's not a substitute for budgeting — and it certainly isn't a cash solution for emergencies.

Before you select the BNPL option at checkout, consider asking yourself: Do I need this, or do I need money for something more essential? If it's the latter, a straightforward, transparent option like Beforepay might be the safer, smarter option.


Disclaimer: Beforepay Group Ltd, ABN: 63 633 925 505. Beforepay allows eligible customers to access their pay and provides budgeting tools. Beforepay does not provide financial products, financial advice or credit products. The views provided in this article include factual information and the personal opinions of relevant Beforepay staff and do not constitute financial advice. Beforepay and its related bodies corporate make no representation or warranty, express or implied, as to the accuracy, completeness, timeliness or reliability of the contents of this blog post and do not accept any liability for any loss whatsoever arising from the use of this information. Please read our Terms of Service carefully before deciding whether to use any of our services.