Afterpay is a buy-now-pay-later (BNPL) service that offers interest-free payment plans. Launched in 2015 in Australia, it debuted in the U.S. in 2018. Since then, it has become extraordinarily popular. Over 13 million people in the U.S. have used Afterpay,
and the company sold $1 billion worth of products nationwide in November 2020. However, just because the payments are interest-free doesn't mean you won’t have to pay any other costs. Learn more about how to use Afterpay and what
to watch out for before choosing this option at checkout.
Afterpay allows you to set up payment plans during the checkout process for many retailers. These plans are all generally structured the same way: The purchase amount is split up into four payments made every two weeks over the course of six weeks, with
the first installment due as you check out. You can also use the Afterpay mobile app to set up an Afterpay Card for contactless payments in stores at select retailers.
Afterpay's business model works differently from other buy-now-pay-later service providers. If you make all of your payments on time, you won't pay any interest or fees. This means your final cost could essentially be the same as if you had just
paid in full for the purchase. Since it doesn’t charge interest, Afterpay makes money through the merchants it partners with. Many merchants hope that they'll be able to spur more sales by offering this type of payment plan to customers.
If your Afterpay payment is late, you could be charged a late fee worth $8. The Afterpay website also states that late fees for U.S. shoppers may be capped at 25% of the order value.
is only available for online purchases of $35 or more.
Yes. When you
first start using the service, you're limited to transaction amounts of around
$150. Over time, if you demonstrate good repayment (on
time and in full), you may be able to use Afterpay on orders of up to $1,000.
Yes. You'll make your first payment immediately. After that, your online purchase will ship out normally, just as if you had used a credit or debit card to pay.
It depends on
the bill and how you make your payment. To pay a bill in person, you'll need to
download the Afterpay app. This gives you access to the Afterpay Card, which
allows you to spend funds just as if you were using a credit card. You
can also load the Afterpay Card into your Apple Pay or Google
Then you may be able to use the card to pay bills (if the company accepts
Afterpay) up to your spending limit.
No, the service does not perform any kind of
credit check, not even soft credit checks,
so it doesn’t look at your score or credit history. Instead, Afterpay manages
its risk by only approving you for small orders at first. Once you prove that
you're capable of managing your debt, you may be approved to spend more.
not report your payment activity to credit bureaus,
even if you pay late. Not reporting
payment activity to credit bureaus is good if you ever do make a late payment.
However, it also won’t help you build credit or improve your credit score.
feature about Afterpay is that it does not charge interest
. not even if you pay late (in that case, you'll be charged
a late fee instead, as mentioned above). You can pay off your Afterpay
balances early. This won't save you any money since you're not being charged
interest. However, paying early will free you of the debt sooner and lessen
your chances of paying the late fee.
quite safe compared to credit cards, personal loans, and payday loans. You
aren't risking your credit if you don't pay, there’s no interest, and the late
fee is pretty small
compared to other credit cards. Instead, the company's betting on
you making your payments on time so that you can use the service again, thus
incentivizing you to spend more. One of the biggest dangers of
buy-now-pay-later services is that they might make it too easy and effortless
to buy things. You could end up spending more than you planned or really can
Afterpay only accepts credit or
debit card payments. For U.S. shoppers, the card must be issued
within the U.S. International cards are not accepted. Paying Afterpay
with a credit card can be a risky strategy because you're putting a no-interest
charge on a high-interest credit card. This is rarely a good choice. In
addition, you may lose out on any points or rewards that come with your credit
If you don't
pay Afterpay, the company does two things. First, you'll be charged a late fee.
Second, you'll be locked out from paying for new orders with Afterpay until you
pay your overdue payments. It's also possible that Afterpay may not
approve you for future purchases either. Your Afterpay payment history is one
factor the company takes into account when deciding whether to approve you or
not for purchases.
SWITCH Your Loan to WKFCU and DITCH Your Old Payment
Lower your existing rate b y up to 1% APR*. Rates may go as low as 2.99% APR*
Get 90 Days No Payment and Much More.
Details at www.wkfcu.org. Check out our VISA Credit Card with rates as low we 6.9% APR.
Shreveport Branch: 318-621-0605; Bossier Branch: 318-629-5622; www.wkfcu.org)
(*Annual Percentage Rates. Some Restrictions Apply. Limited Time Offers.)
(Reprinted in part from thebalance.com)
View All Rates
*APR = Annual Percentage Rate
*APY = Annual Percentage Yield
Rates are subject to change without notice
Read Our Newsletter