Heritage CEO warns of ‘buy now, pay later’ perils

On Wednesday (25 November), Heritage Bank launched a new 12-month interest-free offer for balance transfers on its Gold Low Rate and Platinum Credit Cards. 

The offer is available to both new and existing Heritage Bank members who wish to transfer their credit card from another Australian financial institution.

While launching a new balance transfer offer, the CEO of the mutual lender, Peter Lock, said that he hoped the deal would help people to manage their finances, “which has never been more important than in the current climate”.

He said the COVID pandemic had seen many people having to take a different approach to their finances, adding: “Credit cards remain a fantastic back-up option, especially in times of emergency. 

“Our new offer allows people to move the money they already owe to a new Heritage credit card without having to worry about the additional stress of paying interest for 12 months. 

“By consolidating debt onto one credit card with our current offer, there is also the benefit of fewer fees and easier account management with fewer banking products to manage.”

Mr Lock said credit cards still had an important role to play, despite the growing popularity of buy now pay later services. 

He elaborated: “If you’re diligent about paying your bills on time and managing your finances, credit cards can be a helpful tool to make purchases, earn perks and rewards, and grow your credit history.

“Buy now, pay later services seem attractive, but miss any payments and the late fees can soon add up. Plus there is usually no credit check to make sure you can afford the debt you’re locking yourself into, so you can quickly find yourself in over your head if you aren’t careful.”

A recent report by the Australian Securities and Investments Commission (ASIC) on the buy now, pay later industry found that one in five customers is missing payments on their arrangements.

Moreover, the ASIC report found that a similar proportion of these customers had missed paying their mortgage or bills in order to pay a buy now, pay later provider.

Heritage Bank has also recently announced three new senior executive appointments, as it targets future growth and opportunities in the payments sector and product offering, and looks to enhance its member experience.