To Afterpay or to pay now?
I do a lot of online shopping. More than I probably should. I’ve started to notice more and more online stores are offering Afterpay. Initially, I had mixed feelings about this payment system. This is most likely due to growing up in a family where credit cards weren’t believed in and there was a focus on ‘you don’t buy it if you don’t have the money’. I felt that this was just going to get people into more financial problems but on the other hand could also see it may have the potential to help some with their budgets depending on the small print.
While I was shopping yesterday online for my husband’s Christmas present, when finalising my purchase I had several options to pay and Afterpay was at the top. So, being the sceptic I am and convinced there was hidden costs, I read the fine print and what I found out was:
- The payments for your total purchase is paid automatically every fortnightly for 4 payments
- Payment is taken from debit or credit cards only
- Your application is processed instantly using your bank account details
- Your shopping is shipped straightaway
- You have a login so you can see all your Afterpay purchases
- It appears you can have multiple purchases using Afterpay at the same time
- A $10 Late Payment Fee is due if payment is not received on time, with a further $7 Late Payment Fee added seven days after the payment is due, if the payment is still unpaid
- No Interest is charged
- If you return an item purchased by Afterpay, you are responsible for payments on your purchase until the store has notified Afterpay.
While I was initially attracted to this payment system because I felt like we were haemorrhaging money (you know the feeling, the car rego’s due, school fees need paying, dance costume fees need finalising and the electricity bill just arrived), I took a few minutes to fully assess our situation, we have rainy day savings, we have investments and above all we’ve budget for all those bills. So did I really need a payment plan for a $90 purchase that comes out in 4 fortnightly repayments? I’m thinking no.
With Christmas approaching I urge you to consider your financial situation before making these impulse decisions based on the fact you can pay them off over 4 fortnights. Can your credit card and budget actually manage those repayments, especially if you make multiple payments via Afterpay or will this payment plan simply prolong the Christmas Maxed Out Credit Card scenario?
Whatever decision you come to, don’t end up in a worse financial situation because you have an option to pay items off on a line of credit with another line of credit.
NB: if you are considering using Afterpay, we recommend that you fully read the terms and conditions prior to setting up an account. This blog in no way covers the full terms and conditions.
Nicole Sabo | Marketing Co-Ordinator | The Money Edge | Bundaberg