The Year 2022 Was Marked by Financial Hardship for 90% Of Young People

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According to a recent report, almost 90% of young people have experienced some form of financial hardship over the past year—a concerning trend that could have long-term implications for our economy and society.

The 2021-22 financial year saw a dramatic rise in active Buy Now, Pay Later (BNPL) accounts across Australia. The spending habits of those using Buy Now, Pay Later (BNPL) accounts have grown significantly over the past year.

According to the Reserve Bank of Australia’s data, the number of active BNPL accounts rose from 5 million at the beginning of 2021-22 to an astonishing 7 million by its end. Collectively, these users spent A$16 billion over this period – a 37% increase on the previous year and representing 2% of all card purchases made in Australia.

Young people are increasingly taking on debt they cannot strategically manage or repay on time, leading to increased delinquency rates. By offering easy access and avoiding traditional interest fees, BNPL services have been able to circumvent national credit laws and give young people more control over their finances.

However, these benefits may not outweigh the drawbacks that come with BNPL services. On top of this, there is also growing evidence that suggests using BNPL services can lead to excessive debt accumulation; due to the ease of access and lack of an interest rate, it can be easy for users to take out multiple loans in a short timeframe.

According to the Treasury paper notes, “This unintended regulatory gap creates the potential for consumer harm due to the absence of key protections available to other products regulated by the Credit Act.”

In August, the Australian Youth Barometer surveyed people aged 18-24, indicating that 27% of young people had used Buy Now, Pay Later (BNPL) services in the past 12 months. This is an alarming figure, considering that it has been estimated that 90% of young people have experienced some form of financial hardship over the same period.

The government must ensure young people have access to financial literacy education so they can make wise decisions.

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