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Struggling with a new year debt hangover? Know your rights if you paid with Buy Now Pay Later

Queenslanders swapped their credit cards for Buy Now Pay Later schemes coming into the Christmas and the New Year sales period without properly understanding their contracts or their rights and are now experiencing the “sting in their tail”, according to Legal Aid Queensland.

Legal Aid Queensland consumer advocate senior lawyer Paul Holmes says Buy Now Pay Later schemes are contracts where people borrow money from a company to purchase goods or services and they walk away from the shop with their purchases immediately and then pay the borrowed money off every fortnight.

“Consumers must understand their Buy Now Pay Later contracts, particularly their pitfalls to avoid potential stress and financial pain later down the track,” Mr Holmes said.

“We’ve been seeing an increasing trend where Queenslanders are opting for a Buy Now Pay Later arrangement over using a credit card because, unlike a credit card, you are not charged interest.

“But there is a potential “sting in the tail” with Buy Now Pay Later schemes – any late payments incur a late fee and some companies may also charge payment processing fees or monthly account fees.

“If something goes seriously wrong, people have less legal protections with a Buy Now Pay Later contract than they do with a credit card or personal loan,” Mr Holmes said.

“While it is still worth asking them for help if you are in financial trouble, by law Buy Now Pay Later Schemes are not required to help you if you run into trouble.

“Another reason people are turning to Buy Now Pay Later services is Buy Now Pay Later companies don’t have to assess your credit, something banks and other lenders will do,” he said.

“People may not realise Buy Now Pay Later services can still list a non-payment as a default on someone’s credit report.

“Some Buy Now Pay Later companies have said they do not default list people who don’t pay, but default listing is something the company can do in many circumstances.”

Mr Holmes said Queenslanders experiencing problems with a Buy Now Pay Later contract can get help by calling Legal Aid Queensland on 1300 65 11 88 or by calling a financial counsellor on 1800 007 007.

For more information about Buy Now Pay Later visit Money Smart.

Media contact:  Amanda Catania (3917 0407) or Caroline Page (3917 0457)

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