The dangers of deferred payment

Need a sweater, shoes or a computer: pay in four easy instalments instead of one! This is what online platforms are now offering. While this deferred payment often comes with no interest or credit check, there’s still an element of danger, especially with the younger population.

BRIEFLY

WATCH OUT FOR RISK OF INDEBTEDNESS!

Deferred payment is offered everywhere now, on both online shopping platforms and social networks.
While it allows you to make purchases quickly, it’s also encouraging you to shop more. Young people are especially at risk.
Be careful if your budget is already tight. You could rack up debt without realizing it.
To help you avoid compulsive shopping, the best thing to do is to make a monthly shopping budget and stick to it.

If you need help, contact one of our consultants. They can help you get control of your finances.

Since the beginning of the pandemic, deferred payment – or Buy now, pay later (BNPL) – has grown rapidly, especially among young people. While the principle already existed for major purchases such as a fridge or car, it now allows you to buy everyday consumer goods, such as clothing or designer bags with a few clicks. And, not only is this being advertised by online shopping platforms, the trend is also noticeable on social networks. The buy button has never been so close at hand!

Read our article: The truth about “buy now, pay later” deals

The danger: over consumption, not being able to pay

The downside is that easy access to credit combined with a simplified purchasing process leads to consumerism and compulsive buying. If you have a stable financial situation and are able to repay, this is not a problem. But if you can’t afford it, the risk of not being able to pay and going into debt is real. So, shop carefully, be aware of all the facts.

Young people: most likely at risk

Deferred payment is particularly targeted at younger consumers who like to shop online and like quick transactions. If you have teenagers or young adults, share this message with them! Many already have trouble paying off the minimum balance on their credit card. They are also consumers who succumb more easily to the FOMO (fear of missing out) syndrome. Tempting ads on the Internet, positive opinions from influencers on social networks, prices that seem small split into three or four payments: everything is set up to make them give in to temptation. Talk to them about it, they will become more aware of the dangers.

But regardless of your profile and age, deferred payment shopping is not to be taken lightly. Prevention is better than cure!

Solutions for avoiding the downward spiral into debt

Make a monthly budget for your online and in-store shopping and stick to it.
If you choose deferred payment, account for each instalment in your budget.
Learn to recognize good credit — which enables you to acquire assets such a house, or to pay for education — and bad credit — that creates debt from current spending.
Don’t pre-register your card on your smart phone. By making purchases less easy, you will have time to decide whether or not the purchase is really necessary.
As applicable, avoid platforms that offer deferred payment.