Buy Now Pay Later is Quielty Pushing Families into Debt

At first glance, Buy Now Pay Later services such as Afterpay and Zip appear to offer a convenient way to spread the cost of purchases. But on the frontline of financial mentoring, we are seeing a different reality.

For many families already under financial pressure, Buy Now Pay Later has effectively become another form of money. When wages run out at the end of the week, these services allow people to continue spending, often without fully understanding the consequences.

At Mangere Budgeting Services Trust, we regularly see the impact.

One client accumulated more than $2,000 in debt through Afterpay. When repayments fell behind, the debt eventually escalated to debt collection.

Another client provided a statement showing an upcoming repayment of $900, with the following payment due to be $1,800. The repayment commitments had grown to a level that was simply impossible to meet on the client's income.

In another case, a new mother living in social housing had begun relying on Zip to purchase basic household essentials after discovering she had a large bank overdraft. What began as a short-term solution had quietly become a dependency.

These stories are not unusual. Increasingly, Buy Now Pay Later is becoming embedded in household spending for people who already have very limited financial resilience.

Financial Mentor - Noel Prakesh

Noel Prakash, Mangere Budgeting Services financial mentor, says that “the issue is not simply the availability of credit. It is the way these products are designed and perceived. Because payments are split into smaller instalments, people often feel as though they are spending less. In reality, they are committing future income that may already be needed for rent, food, or power.”

Lara Dolan, CEO of MBST, says that “for many families in Māngere, this is not about discretionary spending or online shopping. We are seeing people using Buy Now Pay Later to purchase petrol, groceries, nappies, and other basic household essentials. Even with recent regulatory changes, Buy Now Pay Later can still create a dangerous illusion of financial capacity. Small repayments can quickly accumulate across multiple purchases, leaving families with commitments that exceed what their income can sustain”.

If we want financially resilient communities, we cannot allow products designed for convenience to quietly push vulnerable families deeper into debt. The cost is not just financial. It is felt in stress, hardship, and the growing number of families turning to community services for help.

In South Auckland, we are already seeing the consequences.