There are four frantic days until Christmas and it's possible you're panicking. It's also possible you're panic purchasing. This is all a normal part of the silly season… or it is unless you buy the new and "improved" Afterpay way.
This is a clever type of quasi-layby that, on the surface, sounds like Christmas has come early. You get to bag your booty – often – without parting with a cent. You then pay in four equal fortnightly instalments over the next six to eight weeks (see my comparison inset).
Afterpay was formerly the preserve of e-tailers, but is now being adopted by retailers at lightning speed, including TopShop TopMan, Cue, City Beach and General Pants Co. Back in just February there were 100 businesses transacting $35 million of annualised sales via Afterpay; 10 months later there are 1500 racking up $300 million. And 40,000 customers have grown to 250,000.
The problem is that Afterpay can make the whole "money" part of a transaction an afterthought. Particularly at Christmas. Add that for the first time in five years Christmas Eve falls on a Saturday and Aussies are in double debt danger. (Gives me shudders just thinking about the crowds.)
Last year, the average monthly credit card spend was $1559, say RBA data, but in December that leapt 11 per cent to $1725. The overall spend this Christmas is forecast to be $48.1 billion by the Australian Retailers Association, up 2.3 per cent on last year.
The ARA's Russell Zimmerman tells me there are no accurate figures available for what proportion of total spending happens in the last few days before Christmas, but added: "We all know they're bedlam."
However, I can reveal savings and cheque account figures, thanks to some exclusive analysis by debit payment facility eftpos. The week before Christmas accounted for a full 36 per cent of December transactions in 2015, $4.1 billion of the overall $11.3 billion.
But only 4 per cent of Christmas spending happened this day last year ($496 million), with it ramping up big style in the two days prior to Christmas – there was 6 per cent on the 23rd ($701 million) and 7 per cent on the 24th ($820 million).
Eftpos spokesman Warwick Ponder forecasts: "The 'rush hour' on Christmas Eve Eve will reach new levels of intensity. I'm predicting Saturday, Christmas Eve will be complete chaos."
For Christmas shoppers who are (Santa?) claustrophobic, the busiest hour at the shops is expected to be between 12pm and 1pm on Friday, when a lot of workers traditionally knock off early and surge to the shops. Last year almost 10 per cent of all transaction for the day were processed in that one hour.
As for the temptation to Afterpay instead of pay upfront, my objection is in two parts. Firstly, Afterpay removes the economic advantage of layby: the ability to pay cash. Here, you have to use a credit or debit card (if a payment bounces, there's a $10 penalty fee in the first week and $7 the following one).
Secondly, not ever having to find cash means you can after pay and pay and pay. Right up to the extent that you can't cover your total 25 per cent repayments due in early 2017. And your short-term "loan" can neatly convert to long-term credit card debt.
That's the possibility. The Afterpay people say it's not the probability. There are no credit checks, contracts or disclosed spending limits, but managing director Nick Molnar says the average single purchase is a relatively small $150 and there's a "net transaction loss" less than 1 per cent of payments. He adds: "If a customer has overdue payments, our system will not allow them to make another purchase."
But the fact remains that with good old-fashioned layby, you can't get overwhelmed and overcommit. You have to pay before you play.
Sure it's no good for presents – you're too late – but it's perfect for the Boxing Day sales… many of which now begin early (especially online).
And layby's particular brand of "retail jail", which still lets you "lock in" the discounts, is the best motivation to find money there is.
Nicole Pedersen-McKinnon is a commentator and educator who presents Smart Money Start, fun financial literacy, in high schools around Australia. themoneymentorway.com