Why Gen Z Aussies want this boomer staple gone: 'Financially dangerous'
Queensland woman Nat, 24, said she had made the switch to buy now, pay later (BNPL) services as they don't have high interest rates like credit cards.
Afterpay revealed earlier this year and that 84 per cent of Aussies deemed credit cards 'financially dangerous' with their use in decline since 2018.
There were about 12.1million credit cards as of March last year with a national debt accruing interest of $20.1 billion.
Nat said she had accrued thousands of dollars in debt after she got a credit card to pay for a laptop that she could use at university.
'It was really scary because it had massive amounts of fees, and I was so nervous about not paying it on time and ruining my chances of being able to buy a house,' she told news.com.au.
'I just found that it kept accruing interest and I was trying to pay it off, but it felt like a massive weight on my shoulders and it wasn't pleasant.
'I saw the amount of interest I had to pay and thought, "Actually, no".'
After that experience she decided to ditch the credit card and sign up to Afterpay.
Nat said she didn't understand why people had credit cards which come with annual fees and high interest charges if they're not paid off.
She recalled how an ex-boyfriend used a credit card to live beyond his means and could only cover the interest and couldn't get his balance down.
'I think it was about $7,000. It was terrifying,' she said.
Nat now prefers the lower risks involved with BNPL options.
BNPL services allow people to split their purchase into smaller, interest-free instalments, often paid bi-weekly.
Services may charge late fees, while credit cards offer more flexibility and potential rewards, but can also accrue high interest if balances aren't paid off on time.
Credit cards allow shoppers to pay for multiple transactions through a revolving line of credit with variable interest rates.
They are more flexible, which can lead to unpredictable statement balances and out-of-control debt.
'Our January 2025 survey found that nearly one in three Australians (32 per cent) have an Afterpay account, with Gen Z (45 per cent) and millennials (41 per cent) leading the charge,' Mozo's personal finance expert Rachel Wastell said.
Many Aussies online didn't agree with Gen Z however, and preferred to use a credit card, which offers benefits BNPL doesn't.
'I've had a credit card for 30 years with a 40-days interest-free period and I've never been charged interest,' one said.
'Credit cards are for emergencies and to be paid off on the last day of the month.'
'Get yourself a really decent credit card that gives you rewards and as long as you pay your card off each month, put everything you buy onto that credit card then use the cashback app and attach your credit card and get paid even more. Every year I get back around $2,000 in rewards, another said.
Graham Cooke, head of consumer research at Finder, said Afterpay was a 'great way to spread a purchase over time'.
'While there is no interest, there are late fees,' he said.
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