Feeling festive? Here's how to avoid the hidden costs of Buy Now, Pay Later this holiday season

There’s no doubt Aussies love to shop, with homegrown consumers predicted to spend more than $72 billion in the build-up to Christmas this year. Much of that spending comes from Black Friday sales, with the traditional day-after-Thanksgiving spending spree gaining significant momentum in Australia in recent years.

But while there are plenty of bargains to be had, there’s a hidden cost to those Buy Now, Pay Later (BNPL) payment options.

Many Australians don’t realise BNPL payments can affect their credit score. It can even impact their ability to take out things like car loans and personal loans when they need them most. Why? Because lenders treat BNPL payments as a debt, and too many of these debts over a short period of time, such as during the festive season, can negatively impact your credit score.

On this page:

• How BNPL may impact your credit score
• Why BNPL isn't simply another form of payment
• How to avoid the festive season BNPL trap
• Some other things to be mindful of this festive season
  

How BNPL May Impact Your Credit Score

• Credit checks: As credit reporting agency Equifax notes, every BNPL application in Australia will almost certainly trigger a credit check. Multiple checks within a short period could lower your credit score.
• Repayment history: Making your repayments on time may seem beneficial, but not all BNPL providers report positive payment history to credit bureaus. However, if you miss or are consistently late with your installments, it's likely to be reported and could lower your credit score in the same way a missed credit card repayment would.
• Defaulting on payments: While BNPL payment options are designed to make shopping even easier, defaulting on payments can have a serious impact on your credit score. This could impact your ability to get a loan in the future.
• Multiple accounts: You may think it’s a sensible option to spread your spending across multiple accounts, but lenders may take a different view: treating multiple BNPL accounts as a sign that you could be struggling to manage your finances.
• Loan applications: Whether you’re applying for a car or personal loan, or even something bigger like a home loan, lenders could consider your BNPL usage when assessing your creditworthiness.
  

Why BNPL Isn't Simply Another Form of Payment

Buy Now, Pay Later services like Afterpay, Zip, OpenPay, and Klarna have exploded in popularity in recent years, prompting the Australian government to bring in new regulations in June 2025 that treat BNPL providers more like traditional lenders.
But while the new regulations deliver more protections to consumers, there is still a knowledge gap around what these BNPL payment options actually are and the impact they could have.
Many Australians don’t realise BNPL is a form of credit, mainly because you don’t need a credit card to access it.
And while you typically don’t pay interest on BNPL services, late payment fees can quickly add up.

How to Avoid the Festive Season BNPL Trap

With more Australians than ever turning to BNPL services to fund their festive shopping, the holiday season can turn into a nightmare new year without careful planning.
Many retailers ramp up their Black Friday sales at the start of November, meaning consumers have almost seven weeks of spending before the Boxing Day sales kick in.
BNPL payments are even creeping into our everyday transactions, with some Aussies using them to fuel up their car or pay for their fast-food deliveries.
One way to ensure BNPL payments don’t affect your ability to secure more significant loans is to reframe the way you think about them.
Treat BNPL services as a form of credit – the same way you would a credit card. Spend responsibly and plan ahead to ensure you will be able to afford your repayments.

Some other things to be mindful of this festive season:

1. Overspending: The pressure to keep up with sales or have the best gifts can make it easy to overspend during the holiday season. Setting a budget ahead of time and keeping track of purchases can help to prevent BNPL costs from becoming too much.
2. Debt Cycles: While BNPL services may not attract the same high interest rates as credit cards, it's easy to get trapped in a debt cycle when your spending outpaces your income. Making a plan ahead of time can help prevent impulse spending during sales season.
3. Fees: BNPL providers make their money from fees. From establishment fees, to transaction fees, to late fees, it's important to know ahead of time what you're getting into. As credit providers, BNPL services are required to include this information on their website.
4. Missing payments: Just like a credit card, missing a BNPL repayment could have consequences. Payments that are more than 14 days late can negatively impact your credit score and can remain on your credit report for up to 2 years, If your payment reaches 60 days overdue and the amount is more than $149, this can trigger a default. A default remains on your credit report for five years, even if you pay it off.

Don’t forget, finance lenders are now required by law to treat BNPL payments as formal debt. To avoid hurting your credit score, set a budget ahead of time, keep track of your spending, be aware of fees and stay on track with your repayments.