26 NOVEMBER 2024 - A record number of Aussie shoppers are expected to use buy now, pay later services this Black Friday and Cyber Monday to offset cost-of-living pressures.
Shoppers are slated to spend $8.7 billion, with $529 million in purchases made with BNPL services.
Compare Club warns that consumers need to be careful not to get caught in the "festive debt spiral," where shoppers begin their spending spree on Black Friday, continue through Christmas, and find themselves juggling multiple BNPL payments through December while accumulating credit card debt. This ultimately leads to a financial hangover in January, when all the bills come due.
"Our research shows BNPL users are twice as likely to fall behind on essential bills and three times more likely to rely on credit cards. With Aussies expected to spend $8.7 billion this Black Friday weekend alone, we're particularly concerned about impulse purchases in popular categories like electronics and clothing, where BNPL usage is highest," said Kate Browne, Compare Club’s Head of Research.
High-Risk Shopping Categories
According to Compare Club’s research, 62% of Australians use BNPL, and nearly a third use it weekly. BNPL users are particularly drawn to categories such as clothing, shoes, electronics, and household appliances. These align well with Black Friday's most sought-after items.
The research shows BNPL services are most commonly used for:
Clothing and shoes (44% of purchases)
Electronics (30% of purchases)
Household appliances (25% of purchases)
These categories align perfectly with Black Friday's biggest discounts, creating a "perfect storm" for impulse purchasing and potential over-commitment.
The BNPL Trap During Sales Events
While BNPL services promise convenient payment plans for Black Friday purchases, Compare Club's research reveals concerning patterns about their impact on financial wellbeing:
Late Bill Payments: BNPL users are twice as likely to fall behind on essential bills
Triple Credit Card Usage: Users are three times more likely to rely on credit cards alongside BNPL
Living Beyond Means: 79% of BNPL users have over 75% of their income going to bills
Warning Signs You're Over-Extending with BNPL
An estimated $529 million in Black Friday purchases will be made through BNPL services but there are warning signs that you’ve gone too far with BNPL:
Having multiple BNPL payments due in the same week
Using credit cards to make BNPL payments
Delaying essential bills to meet BNPL commitments
Feeling daily anxiety about managing payments
"While Black Friday deals may seem irresistible, the convenience of BNPL shouldn't overshadow its financial risks. Remember: a 50% discount on something you can't afford is still money you don't have," said Browne.
Smart Shopping Tips for Black Friday
Create a Realistic Budget
Calculate your disposable income
Factor in all existing BNPL commitments
Include upcoming holiday expenses
Check Your Current BNPL Obligations
Review all active payment plans
Calculate total weekly/monthly commitments
Consider January bill payments
Alternative Saving Strategies
Use savings instead of BNPL
Wait for End of Financial Year sales (Australia's biggest sale event)
Compare prices across multiple retailers
Before Using BNPL, Ask Yourself:
Can I afford this if I lost my job tomorrow?
Will this purchase still be valuable when I've finished paying for it?
Am I buying this because it's on sale or because I need it?
AUSSIE SPENDING HABITS:
While end-of-financial-year Sales may still be the biggest sales event of the year, the Black Friday weekend sees the highest concentration of money spent in its short duration—accounting for a massive $8.7 billion in sales in just four days.
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For media enquiries:
Jasmine Kostas
Media + Capital Partners
0425 327 224
jasmine.kostas@mcpartners.com.au
About Compare Club
Compare Club is one of Australia’s fastest-growing personal finance marketplaces. It helps Australians save money by navigating complicated and important financial decisions. Compare Club’s panel of experts offers bespoke advice to over 3.6 million members making 1 million product enquiries per year on key financial decisions, including health insurance, electricity and gas bills, and personal, car, and home loans. Compare Club is locally owned and employs 350 passionate staff across Sydney, Melbourne, and Brisbane and another 50 staff in Indonesia and the Philippines.
