Have you heard of Humm? I first saw them advertising their service about six months ago. Naturally, I was curious to know more about their service, and how it is different to other Buy Now Pay Later offerings. Because that part is important. With so many services like Afterpay on the market, they need a point of difference to stand out. So what is Humm's point of difference? Let's take a look.
Overview
What is Humm?
Humm is a Buy Now Pay Later service. Buy Now Pay Later services have risen in popularity, in response to millennials shunning credit cards. According to Savings.com.au, Buy Now Pay Later services pay just a fraction of the fees of regular credit card users. This explains the rise in popularity!
Humm itself is similar to Afterpay, in that it lets you buy something now, and pay it back in fortnightly installments. The service is managed through an app, which you use to select Humm as a payment method at the time of purchase.
Who owns Humm?
The answer to this question is a little more interesting than I originally thought! Humm is owned by Flexigroup. They also own Bundll, (read more about Bundll here) as well a suite of other Buy Now Pay later services.
Humm was formerly known as Certegy Ezipay. They existed well before Afterpay, and offered payment plans for large purchases. I first heard of them from a friend who used Certegy to pay for car repairs. Certegy focused not on selling their product to consumers, but on selling to business who would encourage their customers to set up payment plans for expensive items.
Is Humm the same as Certegy?
Yes and no. Certegy has rebranded to become Humm, but the service is different to what was offered under that name. Humm is app based, and is now similar to other Buy Now Pay later services. They also focus more on consumer based spending rather than "store credit", which is not used as much anymore.
Is Humm the same as Afterpay?
As much as a waffle is like a pancake. They are made of basically the same things, but if I got waffles when I ordered pancakes, I'd be mad. Humm works in much the same way, with the main difference being the repayment period is longer. Rather than paying an item off in 4 installments, you can opt for between 10 and 60 repayments. This makes it much more useful for larger purchases.
How does Humm work?
Setting up a Humm account is similar to setting up most Buy Now Pay later services. You sign up for an account and nominate a debit or credit card that your purchases will be charged to.
The first thing to remember is that you have to use Humm at participating retailers. This includes most top retailers, but not all. At the time of purchase, you choose Humm as your payment method. You can then set up your payment plan, including how many instalments you want to make. This will calculate your repayment amount. You can then view and manage your repayments from the Humm app.
For new Humm customers, you need to make an initial payment of 20% at the time f purchase. VIP customers don't need to make this payment.
What is the credit limit for Humm?
This is the big difference between Humm and other Buy Now Pay Later services. The upper credit limit for Humm is $30,000. This is split between two products: Humm Little Things and Humm Big Things. Little things has a credit limit of $2000, making it similar to other Buy Now Pay Later services. Bug Things has a limit of $30,000, making it similar to their previous product, Certegy.
What is Humm Little Things?
Humm Little things allows a credit limit of up to $2000. You can choose to repay purchases in 5 or 10 instalments. Choosing 10 instalments will incur an $8 monthly fee, whereas 5 instalments is free. With Little Things you can make multiple purchases up to your credit limit. Although the upper credit limit is $2000, you may be approved for a lower amount initially. It is not clear what the starting point is.
What is Humm Big Things?
Humm big things allows you to purchase larger items on a payment plan. The upper credit limit is $30000, although you need to apply for that instore, similar to a traditional loan application. Any company will want to be a little bit more careful about giving out $30000 vs $2000. This highest amount that you can apply for via the app is $10000. This is still a decent amount of money.
Big things also gives you the option to repay over 6, 12, 24 and up to 60 months. This reminds me of the 48 months interest free loans that furniture stores used to offer. There are still fees associated with borrowing the money, but it is technically "interest free"
What fees does Humm charge?
I have talked a lot about fees here. I think overall, if you use services like these, you will pay less fees than if you used a credit card. So first, I will go over the fees associted with Humm, then we will compare borrowing the same amount using a credit card.
Monthly Fee: $8 (on purchases repaid over 10 instalments or more)
Establishment Fee: $35 - $90 (on purchases over $2000)
Late Payment Fee: $6
Repeat Purchase Fee: $22 (to make more than one purchase on Big Things)
That seems pretty light on fees. Let's make two hypothetical purchases of $5000. One with a credit card, and one with Humm. In both cases, we pay off our purchase in one year. Our imaginary credit card has 20% interest and 44 days interest free.
As you can see, Humm is a lot cheaper than a credit card, which is why a lot of millennials are opting to this sort of payment method. However, you are still locked in to pay $200 a fortnight for a year. The benefit of credit cards is that the repayments are flexible, even if they do end up costing your more.
Can I make multiple purchases with Humm?
Yes, although for multiple purchases via Big Things you need to get approval and pay a $22 repurchase fee.
Can I make purchases with Humm Big Things and Little Things at the same time?
Yes, you can have a Little Things account open for smaller purchases while paying back an item via Big Things at the same time.
Can I use Humm to pay for solar panels?
This is a weird question, but yes! One of the interesting things I found when researching Humm is that they have 6 solar retailers that allow payment through Humm. This, combined with the $30,000 credit limit for Humm Big Things means you can pay for your solar panels using Humm. On a $10000 loan taken over 5 years, you can expect to pay $570 in fees, if you make no late payments.
How does Humm make money?
With low fees, you may be wondering how Humm makes their money? Afterpay has been criticised recently for making a lot of money from missed payment fees, despite claiming to be low or no fee. Humm makes only 2% of their revenue from missed payment fees. The majority of their money is made from merchant fees, which they charge banks and retailers. The other 25% of their revenue comes from "other fees" which includes monthly account keeping and establishment fees. What this graph tells me is that they are upfront about what they charge, and don't rely on you missing your payments to make extra money.
Humm eligibility
To be eligible for Humm is pretty standard, with one difference. They require you to be employed at least 25 hours a week. This tells me they do a credit check before approving. This is unlike Afterpay which only requires that you connect a valid debit card.
How much do you pay upfront with Humm?
All purchases through Humm require a 20% deposit. This goes for Little Things and Big Things. We thought that $30,000 credit limit sounded a little too good to be true!
How do I become a Humm VIP?
To become eligible for Humm VIP, you have to have made a few purchases with no late payment fees. It's not clear how many and is up to their discretion. They suspended their VIP program during Covis, but it is now available again.
Does Humm credit check?
Yes, especially for Big Things. They say that they don't conduct hard credit checks, and that there will be no hard credit enquiry on your file. If this is the case, that means that paying off your debt doesn't have any positive impacts on your credit file either.
Is Humm safe?
Buy Now Pay Later services provide an extra barrier of security between you and retailers when shopping online. That is one upside of using them.
Does Humm build credit?
Many Buy Now Pay Later companies will give you a small limit to start with, then allow you to have more credit as you prove yourself to be a reliable payer. This may give you the illusion that you are building credit. This is not the case. Using services like Humm will not build your credit rating. Using them a lot may even cause financial institutions to view your application less favourably, especially if you incur late fees.
What stores accept Humm?
Unfortunately, Humm is not available everywhere. But the list in pretty extensive and includes most major retailers. Have a look here for a full list by category
Can I buy Woolworths gift cards with Humm?
No. Woolworths is not a Humm partner, therefore you cannot buy a gift card with Humm.
Can I use my Humm digital card at Woolworths?
No. Woolworths is not a Humm partner, therefore you cannot use your Humm digital card there.
Can I get cash out with Humm?
No, Humm exclusively extends credit for use with any of its Retailer Partners, refraining from offering cash transactions.
Can I pay rent with Humm?
No, Humm exclusively extends credit for use with any of its Retailer Partners, therefore you can not use it to pay rent.
Is Humm worth it?
That is the all important question! Apart from my usual spiel about acessing easy credit, Humm stacks up pretty well against other Buy Now Pay Later services. For a full analysis, head to my article comparing the different options. But in summary, the fees are low and the payments are fairly flexible. It could be a useful service to buy things you need and break the cost into smaller parts.
The Bottom Line
At the end of the day, I still think that credit should only be used for important things. Having a Humm account for everyday purchases is similar to having a credit card. I do think that Big Things could be a useful tool for buying larger things, if used correctly. Remember, credit should be used for important necessities. You can still have the luxuries and finer things in life, but why not try saving for them instead?