Recently on a holiday I went out to dinner and sat next to a friend of a friend. As conversation does these days were talking about the power of the internet and how easy our lives have become. To go shopping – you can find something online – Google a discount code and have it delivered within a couple of days . No wonder physical shops are declining – then the magical unicorn Afterpay came up? Have I used it why/why not. My dinner companion was a big advocate for it so I decided to look into it further. Have you used after Pay? I have – all in the name of research. So should you use Afterpay?
How it works
A heap of online and physical stores offer after pay. You sign up with Afterpay and they act as a third party to pay for your purchase for you. You have to enter your bank account details and each fortnight you pay back ¼ of your purchase price for 4 payments over 8 weeks. So it effectively like a layby but you get your purchases upfront. And the money is direct debited out of your account – so you don’t forget.
What is in it for Afterpay
So the retailer gets their money upfront – so they are happy campers. But how does Afterpay make money – they obviously aren’t doing it out of the goodness of their hearts. So although there are no fees if you have the money in your account. There is if you default on their debit. It is a $10 fee each time your default. No matter if you buy a $800 couch or a $7 necklace. So basically Afterpay are hedging their bets that more people will default in one of their payments than have the money in their accounts.
If you are an amazing budgeter with great self control then I see no problems with after pay for some situations. For example a great buy on a heavily discounted Christmas present in August. Before your Christmas budget kicks in November. However once you have popped your Afterpay cherry – it in my opinion could very easily spiral out of control if your not careful. They make it very easy to use once you account is set up. I know of people who use it everyday and already have found themselves in trouble. So I would proceed with caution. If you do have it – or you find it useful to spread out payments for Christmas etc. Think about downloading their app – so you can manage your payments.
Since I have used it – would I use it again? Probably not. I still think the best way to go is to have the money first! Especially once you have the purchase you rarely want to spend the money paying it off. BUT I can see its benefits for other people – with strong self restraint.
*This is 100% my opinion and not in anyway affiliated with Afterpay*