Food on the table but an Afterpay hangover

Easy short-terms credit is proving a minefield for many, writes Ruby Alexander

As the cost-of-living crisis bites, increasing numbers of people are turning to buy now, pay later services to cover essentials such as groceries.

Studies suggest soaring numbers of Australians started using services such as Afterpay during the pandemic, and welfare providers say the buy now, pay later credit explosion is a timebomb.

Xanda Brown in his bedroom viewing his Afterpay history. (Photo: Ruby Alexander)

Salvation Army general manager of policy and advocacy Jennifer Kirkaldy called "short-term credit" a massive issue”, and welcomed a new government focus on the problem.

"[When] there's a shortfall, there's nothing they can do about that shortfall so they understandably go to credit," Ms Kirkaldy said.

Xanda Brown, a 20- year-old full time apprentice chef who lives alone, said that “with the cost of groceries going up, and just rent, I'm forced to be using Afterpay just to get through the week”.

Mr Brown said he used Afterpay to cover daily necessities such as petrol to commute to work and groceries. Supermarkets do not accept Afterpay directly but the company does allow purchase of gift cards for all major retail chains including Woolworths and Coles, as well as for Uber Eats.

Mr Brown said he had become stuck in what he called the "Afterpay loop", where he could never finish paying off his debt and “never fully experience” his own pay cheque.

Soaring rent prices in Melbourne have also left people struggling, with Mr Brown at once stage forced to live in his van and shower in gyms.

He said he did not feel supported by government and called for more significant increases in income support payments.

"The base rate needs to go be going up if everything else is going up, it's a bit ridiculous."