Afterpay is a payment service that allows you to pay for a purchase over a 6-week period. It works similar to layaway, but you don’t have to wait until your final payment is made to take your purchase home. Apps such as Afterpay are referred to as ‘Buy Now Pay Later.‘
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You might have heard someone talking about using Afterpay, which made you wonder, “What is Afterpay, and how does it work?” We got you covered with all the details you need in this complete guide.
Afterpay is a payment service that allows you to make a purchase but only pay for a portion of the item at the checkout (and still take it home.)
Considered a Buy Now Pay Later platform (often referred to as BNPL companies), Afterpay is one of many that are popping up in recent years. They offer consumers a quick way to make a purchase using a payment plan, but with better terms than a credit card.
Created in 2014, Afterpay offers this convenient type of pay later service.
Whether you’re shopping for clothes, cosmetics, fashion, or home decor, using Afterpay can make your purchase easier to pay for whether you’re shopping online or in physical stores. It can even be used for travel expenses in many instances.
I’ve combed through the Afterpay website and Terms of Service (United States version) to share accurate and detailed information about this modern way of shopping so you can decide if it’s right for you.
What is Afterpay
Afterpay is a financial service that allows you to pay for your purchase over time. It is interest-free and available for online or local shopping (in-person.)
When you use Afterpay, you’re essentially borrowing money from the company to pay for your purchase. You then agree to repay the loan over four installments.
The first installment is due when you make the purchase, and the remaining three are automatically deducted from your bank account on a schedule determined by Afterpay.
It’s easy to use once you are approved.
Simply select it as the payment option when you’re ready to checkout.
Afterpay will pay for your entire purchase but only charge you for one quarter (1/4) of the total purchase price right away via an automatic payment using the debit or credit card you used when you created your account.
Then you’ll pay for the remaining three-quarters of the purchase price over the next 4 weeks, making a payment every two weeks. At the end of 6 weeks, you will have the full balance paid off.
Reminders are sent via SMS text messaging when your payments are nearing the due date. Section 11.1 of the Afterpay Terms and Conditions requires you to accept SMS messages from them, and notify Afterpay if your number changes.
The following statistics, taken directly from the Afterpay website, share the success of the company:
- 14.6 + million users
- 85,000 + brands
- 47,000 + Five-Star reviews on Trust Pilot
- 927,000 + 4.9/5.0 reviews on the Afterpay app
What Countries Support Afterpay
The following countries support Afterpay at the time this post was updated. To ensure the list is correct visit the Afterpay website, as countries may be added at any time.
- United States
- United Kingdom
- New Zealand
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Is Afterpay Free
The Afterpay app is free to download and use.
There are no fees associated with using the platform to make a purchase.
However, it is possible to accrue fees if you are using Afterpay.
For example, if there are not sufficient funds in your account when a payment is due, a fee of up to $8 will be added to your account.
You have 10 days to pay the missed payment, and if the late payment still hasn’t been paid by that time, an additional late fee will be applied.
How Does Afterpay Make Money
Afterpay makes money by charging merchants a fee for each transaction that is processed through their platform.
This fee is typically a percentage of the total purchase price, and it is paid by the merchant when the customer makes their payment.
Afterpay also makes money on late fees when customers don’t make a payment on time.
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Is Afterpay Safe
If you wonder, “What are the risks with Afterpay,” they are the same as any financial service.
While there are risks involved with personal loans of any type, they are minimal with Afterpay.
Since the consumer is not paying any interest or up-front fees, it is safer than carrying a credit card balance, which typically carries a high-interest rate and accrues interest charges.
Also, because you’re paying off the purchase price in six payments, the debt isn’t carried out over a long period of time.
However, there are still some risks to take note of.
First, if you miss a payment, you may be charged a late fee. Additionally, if you repeatedly miss payments or default on your payments, Afterpay may report this delinquent activity to the credit bureaus, which could damage your credit score.
Overall, Afterpay is a safe and convenient way to make purchases without having to pay all at once. Just be sure to keep up with your payments so you don’t incur any late fees.
Is Afterpay a Credit Card
Afterpay is not a credit card and it does not work like a credit card, even though it is a line of credit similar to a personal loan.
It does not charge interest to the consumer, whereas a credit card does charge interest.
It also divides the total purchase price into four installments and sets the dates for automatic payment every two weeks, with the balance paid in full within 6 weeks. A credit card does not operate like this.
How to Use Afterpay
Afterpay is a convenient way to make purchases, but it’s important to understand how it works before using it.
Here’s what you need to know:
How Does Afterpay Work
When you use Afterpay, you’re essentially borrowing money from the company to pay for your purchase. You are agreeing to repay the loan over four interest-free installments.
You can log in to the platform on your computer; however, using the Afterpay app is the easiest because most people carry their smartphones with them.
The first payment is due when you make the purchase, and the remaining payments are automatically deducted from your bank account every two weeks with a total of six weeks of payments.
When you complete your application, you must include a credit or debit card. This is the account that will be automatically deducted for each payment so be sure it is the account you want to use.
If you need to change this account along the way, that isn’t a problem. Simply log into the app and change the method of payment.
Afterpay Sample Payment Schedule
Here is an example of what the process looks like:
You purchase an item that costs $120 on January 1
Payment 1 – Paid on January 1 at time of purchase: $30
Payment 2 – Due January 15 (2 weeks after the purchase date): $30
Payment 3 – Due January 22 (2 weeks after the last payment): $30
Payment 4 – Due February 5 (2 weeks after the last payment): $30
Is There a Minimum Purchase Size When Using Afterpay
Afterpay doesn’t specify a minimum purchase amount; however, stores may have a threshold you can charge.
Ask a store associate for the details on their Afterpay store policy.
Is There a Maximum Purchase Size When Using Afterpay
You’ll be able to see your maximum pre-approval credit limit clearly in the Afterpay app before you buy something.
Getting pre-approved does not mean that you will get the item approved when you’re ready to buy it.
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Does Afterpay Charge Interest
Afterpay does not charge interest. Even if you pay late (in which case, you’ll be charged a late fee,) you still won’t be charged interest to use the app.
Can I Use Afterpay to Pay Bills
It all depends on the bill and how you pay it.
You’ll need to download the Afterpay app to pay a bill in person. This grants you access to the virtual Afterpay Card, allowing you to spend money in the same way you would with a credit card.
The Afterpay Card can also be loaded into Apple Pay or Google Wallet. Then, up to your spending limit, you may be able to use the card to pay bills (if the company accepts Afterpay.)
What Happens if I Don’t Pay Afterpay
If you don’t pay your Afterpay bill, the corporation will take two steps.
You’ll be charged a late fee first. Second, you’ll be barred from using Afterpay to pay for new orders until you clear your past-due balance.
It’s also possible that Afterpay will reject your application for future purchases since prior payment history is a consideration for approval.
Can You Use Afterpay on Amazon
No, Amazon does not support afterpay as a payment option.
Stores that Accept Afterpay
If you are wondering who accepts afterpay, the answer is many stores!
Afterpay is available at thousands of stores both online and brick and mortar.
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Travel and Afterpay
Afterpay can be used for travel bookings.
This means that you can pay for your flights, hotels, and other travel expenses over time, which is a great way to spread out the cost of a vacation or business trip.
While many retailers offer Afterpay, not all hotels accept this form of payment.
However, a number of hotels accept Afterpay, including some of the most popular chains like Marriott and Hilton.
In addition, a number of independent hotels also accept this form of payment.
If you’re unsure whether a particular hotel accepts Afterpay, contact the hotel directly to ask.
When it comes to payment options, Afterpay is one of the most flexible and customer-friendly options available so it’s no surprise that more and more hotels are beginning to accept this form of payment.
Afterpay is available at select airlines, including Virgin Australia, Qantas, Tigerair, and Jetstar.
Can Afterpay be Used to Rent a Car
Unfortunately, there are no rental car companies that accept Afterpay at this time.
Your Credit and Afterpay
One of the most common questions about Afterpay is whether or not it will affect your credit.
The answer is no! Afterpay will not affect your credit because they do not report to a credit bureau. However, they do perform a credit check for account approval. Read the details below.
Does Afterpay Check Credit
Yes, Afterpay checks your credit report to make a decision about granting you a loan with them, as well as to help determine where to set your credit limit.
Per section 6.2 in the Terms of Service agreement, when you complete and submit your application you are granting permission for Afterpay to obtain one or more of your credit reports or consumer reports to determine loan eligibility.
It isn’t stated what the minimum credit score is for approval.
Does Afterpay Hurt Your Credit
Afterpay will not affect your credit because the company does not report activity to credit bureaus.
Does Afterpay Build Credit
Afterpay will not build your credit because the company does not report payment history to credit bureaus.
Can I Pay My Afterpay Off Early
You have the option of paying off your Afterpay debt early. Keep in mind you won’t save any money by doing this since interest is not being charged.
On the other hand, making early payments will get you out of debt faster.
Is There a Monthly Fee for Afterpay
There is no monthly fee for using Afterpay.
How do I pay with Afterpay
Select Afterpay as your payment method when you are at the checkout.
You will then be prompted to enter your credit or debit card details and Afterpay will automatically deduct the payment from your account in four equal installments.
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What are the Benefits of Afterpay
This can be a helpful option for people who want to make a large purchase but don’t have the cash on hand to pay for it all at once.
Afterpay can also be useful for people who are trying to stick to a budget but may be tempted to overspend if they have the full amount of money available to them.
By using Afterpay, shoppers can stick to their budget and avoid accumulating long-term debt.
The service is also convenient because shoppers don’t have to carry around extra cash or credit cards.
What is the difference between Afterpay and Zip Pay?
Both Afterpay and Zip Pay are services that allow you to buy now and pay later.
They work in a similar fashion in that a customer can buy anything and take it home right away while making payments on it.
One significant distinction is that Afterpay does not charge fees for using their service, but Zip Pay does. Afterpay does levy a fee if payments are not made on time.
Another key distinction is the location in which the card can be used. Zip Pay can be used anywhere, including to pay bills, but Afterpay requires the store to be on its availability list.
These are a few of the most significant differences between the two apps, although there are others to consider if comparing them.
For a complete guide on Zip Pay, this post will give you all the details: What is Zip Pay [Previously Quadpay – the Ultimate Guide]
Should I Use Afterpay
Ultimately, the decision of whether or not to use Afterpay is up to the individual.
It allows you to shop now and pay later.
Plus, it’s a convenient way to make purchases while keeping your money in the bank until a payment is due.
On the other hand, it’s important to know your spending limits and how much money you have available before you use Afterpay because you can get into financial trouble if an installment comes due and there is not enough money in your account to make the payment.
Afterpay Customer Service
If you need to get in touch with the Afterpay customer support team, there are a couple of ways to get in touch with them. Get the details you need by visiting this post, Afterpay Login, Payment, Customer Service.
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