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Be a customer that Afterpay and the banks just don’t like

Be a customer Afterpay and the banks don't like. Source: Getty
Be a customer Afterpay and the banks don't like. Source: Getty

The SMH recently ran with a disturbing headline that read: “Credit cards are for seniors…”!

The story focused on the Commonwealth Bank of Australia’s chase for millennial customers by teaming up with the Swedish version of Afterpay, called Klarna.

This development comes as the debit card spending was greater than credit card spending.

“Not only are people actually reducing their spending on credit cards, they are at an increasing rate becoming more aggressive in seeking to work down their debt,” says industry expert Mike Ebstein, of MWE Consulting.

Klarna, like Afterpay, plays in the BNPL - or buy now, pay later - space, which is a space owned by young people but undoubtedly will suck older consumers in over time.

Obviously, BNPL businesses are all about short-term loans that typically allow people to make purchases without incurring interest or fees, provided they pay the money back on time. And that’s where I come in as a money mentor, coach or adviser.

These modern day changes are really satisfying for consumers who want instant gratification by getting what they want now.

However, this social payoff comes with potential traps and therefore demands that those who play this game embrace a disciplined approach to money.

You see, financial products are like power tools — they’re fantastic for doing really tough jobs in double quick time but they can make a mess of someone’s body if they aren’t handled with care.

When credit cards exploded with popularity in the 1980s and beyond, the customers that the banks and credit card suppliers hated were the ones that took the 55 days free credit and paid off their cards before interest could be charged.

These people had their acts together and their pay-off was a great way of buying with nearly two months of free credit. These people were business-like and had plans, which meant they didn’t end up losing thousands of dollars a year in interest.

Clearly, Afterpay, Zip and Klarna could be useful tools in the hands of someone who has their money life really organised. This type of organisation with your money affairs has to be your goal, if you want to grow richer over time. Of course, if you like the idea of growing poorer over time, then stop reading.

On the cover of my book Join the Rich Club, I feature a quote from the comedian Sophie Tucker, who famously told us: “I’ve been rich. I’ve been poor. Rich is better.”

If you think she’s on the money, then check out all your financial products from bank accounts, to credit cards, to loans to even your super fund. Find out what they’re charging you and then go to comparison websites to see if you can do better.

And then do what only the really money-smart people do — read the fine print linked to these products, as well as the statements you receive. And do it because it will show you ‘stuff’ that will encourage you to make better decisions about your money and how you spend, invest and grow it, so you become richer over time.

It’s the person who swaps money amateur-hour for professionalism who will become a great money manager, investor and wealth-builder. Like with most things, you have to want something really badly and then change you.

Yep, it’s like when you want to lose weight and get fit, you have to eat better and find time to work out — and guess what? You start to look great.

However, if you prefer to be poorer over time, just simply ignore my advice or coaching and you’ll be a customer that banks and businesses like. Afterpay and the banks will really love because you’ll be paying late fees, lots of interest and being slugged high fees for your trouble.

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