“BNPPL’s services are extremely popular with young consumers for a reason: they allow fast and easy credit with less risk than a credit card,” he said. “Gen Z may be the first generation since credit cards were introduced to ditch them altogether.”
The study found that Gen Z are the most likely to use BNPL, with 74% reporting paying for items in installments compared to just 19% of baby boomers. However, Cooke warned that BNPL services don’t build a credit history the same way a credit card does and can lead to lower credit scores for Gen Z members applying for home loans.
“The appeal of BNPL services, which allow people to walk out of a store with an item and pay for it later, is strong. With many services requiring no credit checks, they offer an easy path to instant gratification with little noticeable downside, ”he said. “BNPPL’s services are credit products like any other [though], and all credit products carry risk.
While many experts agreed BNPL’s services were one of the reasons for the decline in credit cards, they said other factors were also at play. Shane Oliver, chief economist at AMP Capital, and Rebecca Cassells, deputy director of the Bankwest Curtin Economics Center, both highlighted the impact of Covid-19 on consumers’ credit habits, saying many consumers pay and cancel their cards and instead opt to save.
“[BNPL services] are a factor. But I think Australians have learned to rationalize their use of credit cards in the face of credit card fees and high interest rates on outstanding credit card debt, ”said Oliver.
Cassells said: “The drop in demand for credit cards has also been affected by Covid, with many consumers paying and canceling cards in the past 12 months and opting to save instead.”
Those over 60 will remember when credit cards came to Australia in the early 1970s. Back then, it was probably hard to imagine cash would ever fall out of favor, but by 2016 debit and credit card use had overtaken cash for the first time.
In early 2020, the Reserve Bank of Australia (RBA) released pre-pandemic data indicating that the trend had continued – and may have increased due to the country’s declining use of cash during the pandemic. The RBA surveyed more than 1,000 people – recording more than 11,000 in-person transactions – with data suggesting Australian consumers were continuing to switch to electronic payment methods. The survey showed that card payments had become preferred over cash for all payments over $ 5.
Older survey participants were those who tended to use cash more frequently, which was attributed to the fact that they lived in regional areas and had lower internet access than their younger counterparts. Older Australians tend to be wary of debt, whether it’s a credit card or a smartphone app.
We asked Begins at age 60 members for the best financial advice they’ve ever received, and those who used credit cards said they only had one rule: pay off the balance in full each month to avoid interest payments. Meanwhile, many other people over the age of 60 have told us that “living within your means” and “spending less than you earn” have been their lifelong mottos.
“Stay away from bad debt, like borrowing for vacations or furniture,” one reader said. “Borrow only for assets that are growing in value. “
“Don’t buy anything you can’t pay for in cash,” another reader advised. Or, as another put it succinctly, “People who win beer can’t taste champagne!” “
IMPORTANT LEGAL INFORMATION This article is of a general nature and for information only, as it does not take into account your financial or legal situation, your goals or your needs. This means that it is not a financial product or legal advice and should not be relied on as if it were. Before making a financial or legal decision, you should determine whether the information is appropriate for your situation and obtain independent, licensed financial services or legal advice.