humm: What is humm and how does it work

humm caters to the requirements of a broad range of users by offering two payment wallets within a single service. You get access to the smaller of the two wallets (‘Little things’) as soon as you sign up on humm and are approved to use the platform. 

You can use your ‘Little things’ wallet to buy as many items as you like up to your approved spending limit. The maximum amount you can spend on your ‘Little things’ wallet is $2,000. However, you may be approved for a smaller amount when you sign up, depending on the background information you provide at the time of joining the platform. Once you start using the platform, you may request for your credit limit to be increased.

You can use your ‘Little things’ wallet for making payments (both online and in-store) at merchants that accept humm as a form of payment. Repayment for ‘Little things’ can be spread across five fortnightly or 10 weekly repayments. 

If you are looking at covering a bigger expense, you need to apply online or in-store to use the ‘Big things’ wallet. It's possible to get pre-approved for a spending limit of $5,000 on your ‘Big things’ wallet online or using the humm app. 

If you need to spend more, however, you'll have to apply in-store. Repayments for ‘Big things’ can be made over six, 12, 24, or even 60 months, without paying any interest.

Joining humm is pretty straightforward. To sign up, you must be:

• At least 18-years old.
• An Australian citizen or permanent resident.
• Working actively (over 25 hours a week) or receiving an aged or veteran's pension for using 'Big things'.

Once you download the app and sign up, you'll go through an approval process where you'll be required to submit your ID documents, employment details and bank details. For larger expenses or 'Big things', humm may check your personal expenses before approving a particular transaction.

humm doesn't charge any monthly fees for purchases under $2,000 paid over five fortnights. However, an $8 monthly fee applies if you pay off these purchases over 10 fortnights. Additionally, a late payment fee of $6 applies to purchases less than or equal to $65.

For Little Things purchases greater than $65, humm’s late fees are capped at 18 percent of the purchase price or $48, whichever is lower. The maximum late fee you may be charged on your Big Things purchases is capped at 18 percent of the purchase or up to $78, whichever is lower.

A monthly fee of $8 applies to all the ‘Big things’ purchased via humm. There's also an establishment fee of between $35-90 for larger purchases, depending on the price of the item you buy. If you have used humm before, you'll pay a repeat purchase fee of $22 on ‘Big things’ instead of the establishment fee.

It’s worth noting that even though humm charges no interest on your repayments, it does levy different types of fees that can add to your costs significantly. For instance, a shopping spree worth $15,000 spread across a term of 50 months will see you pay a total of $400 in monthly fees. Add to this the maximum establishment fee of $90 for a new user, and your additional costs come to $490, which is equal to 3.27 per cent of your original spend.

The good thing about humm is that it is completely transparent about the fees it charges its users. There's a handy calculator on the site that explains your options, allowing you the freedom of choosing a repayment plan that works for you. humm also claims to notify its users three business days before a scheduled payment to ensure they have adequate time to put money in their linked account to avoid being hit by late payment fees

humm states on its website that it may look at your credit score while assessing your application, but simply applying for humm may not affect your credit score or leave a record on your credit file. 

BNPL platforms are not currently regulated by the same consumer protections as other credit providers because they don't charge you any interest and don't fall under the National Credit Act. Therefore, platforms like humm are not obliged to carry out full background and credit checks. 

However, the government has decided to amend the National Credit Act and include BNPL providers as credit providers under the Act. Once this happens, you can expect stricter regulations within the BNPL industry, including carrying out credit checks on prospective users. 

Once these new rules are put in place, a hard enquiry will be recorded on your credit file when you apply for a BNPL service. These enquiries are visible to lenders who check your credit file when you apply for any credit product in the future. Having multiple hard inquiries within a short period could raise concerns for lenders that you are experiencing financial difficulties or are unable to manage your finances.

Besides credit checks, there are other ways that your credit score may be affected when you use humm, or any other BNPL service for that matter. 

Even though most BNPL platforms, including humm, will not allow you to make further purchases if you default even once, it's easy to sign up for multiple BNPL platforms and push yourself into a vortex of debt, made worse by the late payment fees charged by these platforms. 

Additionally, humm and other BNPL platforms may report any late payments or defaults to credit reporting agencies, much like your credit card providers, which is going to hurt your credit score.

humm offers users a convenient way to pay for day-to-day expenses and important things like medical treatments through easily manageable instalments without charging any interest. However, it's worth remembering that any BNPL service is still a form of credit and must be used responsibly in order to avoid any negative impact on your financial health and credit score.

When planned properly, a humm account can be a helpful tool for managing your expenses without using a credit card. However, if you have had trouble spending on a budget or lagged on your repayments in the past, it may be better for you to rely on your savings to purchase what you need.

If you are using humm and find yourself in a challenging situation, you can contact the BNPL provider to discuss reducing your repayments or find another way to overcome the problem under their financial hardship assistance plan.