4 psychological traps of buy now, pay later - and how to escape
Aussies have increasingly turned to buy now, pay later (BNPL) as the cost-of-living crisis worsens, but now it's causing problems for many consumers who are racking up debts across multiple providers and exacerbating their financial stress.
As the lovechild of instant gratification and modern consumerism, BNPL’s ‘get it now, worry about payment later’ concept keeps us stuck in a cycle of consumption that is difficult to get out of.
Also by Emma Edwards:
Here are four psychological traps of BNPL that keep us stuck in the spending cycle, and tips for how to break free right now.
Trap 1: Leaving it to ‘future you’
When you purchase an item with BNPL, you’re only required to pay a small upfront cost and in some cases you don’t need to pay anything at all. Either way, the rest is for future you to worry about.
Psychologically, this reduces the barriers to purchase and streamlines our spending. Our brains have a habit of viewing our future selves as strangers, making it a lot easier to pass the buck onto the person we believe we’ll be in two, four or six weeks time.
Problems arise when the excitement of that initial purchase has worn off long before we’ve paid the bill. And in the case of consumables like makeup, skincare or even food and drink, it’s possible that we’ll have finished the items before they’re even paid off.
Trap 2: The cycle of BNPL consumption
Getting lumped with four bills (or more) to pay off for every transaction made with a BNPL provider can cause continual dents in our relationship with money. You buy something once, but you have to experience the pain of paying for that item for weeks afterwards. This can cause a feeling of shame, regret or perceived loss of control of our finances – and these are all emotions that can lead to more spending. Not only that but the relief of finalising payments can be enough to send you on a reward-hunting shopping spree.
Trap 3: We spend more with BNPL
BNPL providers boast increased sales and higher average order values when onboarding merchants, which proves one thing – we spend more when we use BNPL.
Why? Because over time our brains become accustomed to splitting prices into several instalments. Suddenly, something that costs $100 is getting through our affordability filter as though it’s a $25 expense. Plus, being able to defer responsibility without compromising on instant gratification makes it easier to commit to bigger purchases.
