What is Afterpay?
For the uninitiated, Afterpay is a buy now, pay later platform targeted towards millennials because it taps into their spending habits and instant gratification mentality. According to Roy Morgan, 40.6% of buy now, pay later transactions are made by millennials.
Think of it as lay-by in reverse. For its 2 million+ users.
The pros of Afterpay
The main benefit of Afterpay is the staggered payment plan on purchases. When you buy an item, you simply select Afterpay as your payment option. If you are a first-time customer, you will be prompted to create an account; if you are returning, you will just need to sign into your account to authorise the payments. Afterpay will then charge you in four equal instalments every two weeks.
The lack of fees makes Afterpay an extremely attractive option to many customers. Unlike a credit card, you are not charged interest and will not need to pay off a lump sum at the end of the month.
Afterpay also charges you automatically every two weeks on your payment date, so you do not have to add another bill payment to your to-do list.
There is a fast and easy approval process, with the only requirements being to be at least 18 years old and to have a valid credit or debit card to link to your account. There are no credit checks and practically no wait times in getting approved.
The cons of Afterpay
With so many benefits to Afterpay, it’s hard to imagine any downsides. But the benefits could turn into drawbacks, depending on your circumstances.
Afterpay will charge you a late fee if one of your automatic payments fail. If you are not in the habit of keeping close track of your bank account balance, you may want to consider this before using Afterpay.
The staggered payment plan can also make it difficult to keep track of your upcoming payments. If you accidentally over-purchase on Afterpay.
So, should I use Afterpay?
Like any financial product, whether or not Afterpay is right for you will depend entirely on your personal spending habits and circumstances. If you want a flexible payment plan and a fee-free alternative to credit cards, Afterpay could be a great option for you.