A disturbing new search trend is exposing the severity of Australia’s cost-of-living crisis.
Recent data from Google shared with Yahoo Finance show the second-most-popular search term relating to bills was: "Can I pay for bills with Afterpay?". While"can I pay for groceries with Afterpay?" was the third ranked for groceries searches. The desire to put these everyday expenses highlights the grim reality of how more and more Aussies are struggling with extreme financial stress.
Afterpay is a buy now, pay later (BNPL) service that allows users to split payments into four interest-free instalments, usually without a pre-qualifying credit check. Often associated with non-essential purchases like discretionary clothing, entertainment, tech and travel, it’s clear more and more Aussies are turning to BNPL providers to afford basic essentials. And it’s no wonder.
More Aussies are turning to buy now, pay later services like Afterpay to pay everyday bills. (Source: Getty) ·Samantha Menzies
However, it's no longer just mortgage repayments causing Aussies financial stress. Compare Club’s biannual Bill Stress Index revealed 47 per cent of Australians were now anxious about being able to afford their utility bills, including electricity, gas, water, and internet. This percentage doubled from 23.4 per cent in May.
Everyday households have been dealt blow after blow this year. July saw the Australian Energy Regulator deliver an increase to power bills. In supermarkets, recent ABS data showed bread and cereal prices were up 8.5 per cent since October 2022, and dairy was up 7.8 per cent over the same period.
Anecdotally, social media commentary points to rock-bottom consumer sentiment towards major supermarkets. TikTokers swarmed to share resurfaced footage of a Coles advertisement from 2017, showcasing how to “feed the family for $10”. The same meal from the advert rings up at over $24 in 2023.
Food insecurity on the rise
According to Foodbank's 2023 Hunger Report, food insecurity is now being experienced in homes it has “never touched before” – which explains why more people are looking to Afterpay to feed their families.
“The fastest-growing cohort of people coming our way are people that have never needed our help before,” Foodbank Australia's chief communications officer, Matt Tilley, said.
“Throughout 2023, 3 million households went from experiencing food stability to short-term food instability."
The increased cost of living was cited as the primary reason for food insecurity for 79 per cent. Such instability “affects the emotional relationships inside families.”
But, while services like Afterpay may provide short-term financial relief, they can create broader problems down the track. If you’re using BNPL to bridge a cashflow gap you’re certain you can repay without penalty in the near future, that’s one thing. But if you’re dealing with ongoing food insecurity, help is available.
'If you need food, we have it for you'
Tilley explained that Foodbank’s message to anyone needing to consider buying groceries on credit was, “If you need food, we have it for you".
Reducing the stigma around accessing support from services like Foodbank is more critical than ever. Citing “shame and stigma” as among "the great preventers” of people accessing food relief, Tilley noted the charity had seen an increase in people “mortified that they used to donate to us and now they’re calling on our services”.
The hunger-relief charity has been running evening and weekend markets to get more food relief into the hands of families that need it, and making that relief available at a time that’s accessible to people who are working during the week. Tilley encouraged anyone struggling to afford food to head to the Foodbank website and hit the “find food” button.
“You don’t have to give your name or any details,” he said. “It will just geolocate you and give you a list of places you can go.”
Foodbank services rely on donations and funding to provide critical food relief to those doing it tough. If you’re able to donate to help their important work, head to the Foodbank website.
BNPL can create cycle of repayment stress
Financial experts warn that, while Afterpay can be an attractive temporary solution to cashflow issues, it’s easy to get stuck in a difficult cycle. While the platforms promise you won’t pay interest, you may be hit with late fees if you find yourself unable to meet your repayments.
Deline Jacovides, founder and financial planner at Mazi Wealth, explained that, while some BNPL providers didn’t run credit checks, simply having an account could “affect your capacity to take out a loan, as it speaks to [financial] behaviours and characters”.
In addition, Afterpay does have the ability to report negative activity on your account. This is the type of thing that can impact your credit score, and cause problems if you want to access credit in the future.
Jacovides also expressed concern over the psychological traps of BNPL.
“Using credit creates an illusion of additional resources,” she said. “Spending with credit that has a deferred-payment option creates distance between the act of spending and the consequences.
“Users can struggle to get back on top of their budget, particularly if they end up having multiple outstanding payments simultaneously.”
Debt doesn’t have to be the only option
Widespread services like Foodbank can provide food relief to prevent you from having to go into debt to feed your family. When it comes to bills and utilities, bill smoothing can help regulate your household cash flow and make costs easier to manage.
“Rather than getting a bill each quarter and not knowing what you’ll be in for, depending on the season, bill smoothing sees customers paying a regular bill each month,” Kate Browne, head of research at Compare Club, said.
Bill smoothing uses predicted usage rates to smooth out your repayments and avoid those hefty and unexpected bills delivered once a quarter.
If you're feeling overwhelmed and need help dealing with financial stress, you can contact free advice and counselling from the National Debt Helpline. You can call 1800 007 007 between 9.30am and 4.30pm Monday to Friday.
