You will be able to spot BNPL stacking and set a personal limit on total instalments.
Over three months, Ryan said yes to instalments four times. The running shoes from lesson 4.1, a phone, two concert tickets and a laptop he put on his bank card's instalment plan. Each one felt small when he agreed to it. Then payday came, the rent and his parents' allowance went out, and he found that S$490 of what was left was already promised to four different companies before he had bought a single meal.
No single plan caused that. All four did, together, and nobody but Ryan was in a position to see it.
A BNPL plan is designed to look small, as lesson 4.1, How BNPL makes money when you pay no interest, explained. The trouble is that a plan rarely stays alone. Once an app is set up on your phone, the next checkout offers it again, and other apps offer theirs. The repayments from each plan land in the same months.
Here are Ryan's plans with example figures. The shoes cost S$480 in three monthly instalments of S$160. The phone cost S$900 in six instalments of S$150. The concert tickets cost S$240 in three of S$80. The laptop cost S$1,200 on a 12-month card instalment plan of S$100. Next month he owes S$160 plus S$150 plus S$80 plus S$100, which is S$490.
Ryan's spending money, after rent, his parents' allowance, transport and his savings transfer, is about S$900 a month. So S$490, about 54% of it, is gone before the month starts. Each plan on its own was between 9% and 18% of his spending money. Together they take more than half.
Each BNPL provider sees its own plans. Ryan's phone provider knows about the phone. It may not know about the shoes in another app or the laptop on his card. The code of conduct from lesson 4.2, What the BNPL code of conduct asks of providers, sets limits one provider at a time, so Ryan can be well within every provider's limit and still be over his own.
Banks see more through Credit Bureau Singapore, and how BNPL information is shared with CBS has been developing, as lesson 4.1 noted. Even so, no lender is checking whether Ryan's total monthly instalments leave him enough to live on. That job falls to him, and the only way to do it is to write every plan down in one place, which is the next lesson.
The most useful change in thinking is this: an instalment due next month is not future spending. It is past spending you have not finished paying for. In that sense it is exactly like a credit card balance. The only difference is that the BNPL balance arrives in neat pieces with no interest, as long as nothing goes wrong.
When Ryan looks at his bank balance on payday, the S$490 is still in the account. It looks available. It isn't. If he spends it on something else, he has to find it again before each due date, and the easiest place to find it is another instalment plan or a credit card, which is how stacking turns into debt that does charge interest.
Treating committed instalments as already spent changes what the bank balance means. Ryan's real spending money next month is S$900 minus S$490, which is S$410, and that is the figure he should make decisions with.
Stacking happens gradually. Nobody decides to commit half their spending money to instalments. It happens one reasonable-looking plan at a time. So the defence is a rule decided in advance, not a judgement made at the checkout when the instalment looks small.
A simple version is a fixed cap on total monthly instalments across every app and card. Ryan might set his at S$150, about a sixth of his spending money. Before saying yes to any new plan, he adds its instalment to what he already owes in each coming month. If the total goes over S$150 in any month, the answer is no, or wait until an older plan finishes.
The number itself is a personal choice, and it can be zero. What matters is that it is written down before the next checkout, that it counts every plan everywhere, and that it applies to the total, not to each plan alone. A cap per plan would let Ryan reach S$490 again one plan at a time.
Before the full audit in lesson 4.4, start with the one number that matters most. Open every BNPL app you have used and every card with an instalment plan, find what falls due next month, and add it up. Then set that total beside your monthly spending money and see how much of the month is already spoken for.
Add up every instalment due next month across all apps and cards and compare the total with your monthly spending money.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).