The impact on people facing hardship due to the ongoing lockdown has financial support agencies banding together to drive home the message - spend safely in the lead up to Christmas.
National Strategy for Financial Capability partners Ngā Tāngata Microfinance, Good Shepherd NZ, Christians Against Poverty (CAP), FinCap and Te Ara Ahunga Ora Retirement Commission’s Sorted want to make sure those who need some extra financial help and advice know where to turn to.
A campaign promoting the services available of each of the agencies, along with safer ways to shop to avoid a ‘#buynowpainlater’ situation, kicks off this week, in the lead up to Black Friday sales and Christmas.
Ngā Tāngata Microfinance Chief Executive, Natalie Vincent says: “we are encouraging people to get help with their budget, plan safe spending over the holidays and avoid heading into the New Year with unmanageable debt. There is no wrong door to knock on for free support and advice, we are all here to help.”
Te Ara Ahunga Ora Retirement Commission Director, Stakeholder Relations, Anika Forsman says COVID-19 has amplified the hardships many young people and overstretched families are facing.
“It’s making an already challenging situation worse, and as a result financial support agencies are in high demand for their services, but there’s still many who might not know help is available,” she says.
“Free support and advice is available to those who need it in the form of financial mentoring, interest free loans, budgeting advice, debt-help, links to foodbanks, and help navigating Work and Income processes and entitlements.
“It’s more important than ever to prevent the spiral into debt and poverty, and that’s why we are working together to help spread the word of what help is out there.”
The agencies are also noticing a concerning upward trend in their clients using buy-now, pay-later (BNPL) to cover everyday essentials such as meat and groceries.
BNPL has changed the lending landscape by increasing access to credit without the regulations of traditional lending.
FinCap’s financial mentors report clients have up to 13 separate BNPL payments owing at any one time. And insights gathered from Ngā Tāngata Microfinance in October reveal 35% of the people they are helping are using BNPL, with 26% saying they have missed a payment.
Te Ara Ahunga Ora’s own consumer research has seen BNPL usage go up for under 65s, from 18% in February to 24% in September. Among Māori aged under 65 years, BNPL has increased to a greater degree, 24% in February to 34% in September.
“BNPL can be a great option for those wanting to spread the costs of something, but debt can quickly add up if you have too many transactions, miss repayments, and get hit with late fees,” says Forsman.
“Christmas is coming, and after a challenging year it’s tempting to fall into a trap of overspending and using too many BNPL at once. If people are regularly using credit to make ends meet, then reach out to these amazing support agencies. Most people don’t think to get help until it’s too late.”