Nationally, Christmas spending is predicted to hit $50.1 Billion, a 3% increase since last season. At the same time, all states and territories are expected to experience a 2-4% boost to their 2018 spend. Online spending is also forecasted to lift.
These are the predictions of National Retail Association (NRA), who announced their Christmas forecast this week.
According to the NRA, the period between the second-half of November and all of December is the busiest retail period of the year.
But NRA CEO, Dominque Lamb, says it won’t just be feet in stores pushing figures up.
“Shoppers are set to splurge an average of $54,347 per minute in online sales alone…The total digital spend will reach $3.6 billion over the six weeks,” she said.
Historically, Christmas is a time for heavy spending, and the use of Afterpay is rising.
Last year, an ASIC report found that ‘buy now, pay later’ services are affecting spending habits, with over 50% of users spending more. It also found that 1 in 6 users of the service have become overdrawn, delayed other bill payments or borrowed additional money.
According to a survey by Mozo, pay later services are also the most popular way to pay this year’s Christmas bill. Over 27% of respondents said that they would be using the services, with debit cards being the next most popular method.
Despite their popularity, finance experts are warning Australians to stay away from ‘buy now, pay later’ services if they have home loan plans.
Pink Finance founder and mortgage broker Nicole Cannon says that she frequently discusses the services with clients, and that their use has been known to affect credit scores.
“For the consumer, Afterpay and Zip may seem great from a cashflow perspective because they can pay off their items over a period of time, but most people don’t realise credit inquiry is listed on their credit file,” she said.
“So they’ve already got listed a $1000 or $2000 credit limit which the banks have to assume is maxed out which can reduce your borrowing capacity.”
Mortgage Choice chief executive Susan Mitchells agrees, telling news.com.au:
“If you’re looking to apply for your first home loan in the near term, stay away from buy now pay later services,” she said.
Words by Kathryn Lee
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