SJ Financial

Indulge Now, Pay Later: The Pros and Cons of Afterpay

Written by Sandra on Aug 16, 2018

Afterpay is a payment solution phenomenon that has taken Australian shoppers by storm. It allows customer’s to buy something now and pay it off later, while still receiving their product straight away whether they purchased it online or in store.


Afterpay is paid a fee by retailers for each transaction. When someone purchases a product from the retailer, Afterpay pays for the product and then withdraws the amount from the customer’s bank account in four equal instalments over a 56-day period.


Now with over 160,000 Facebook followers and 26,000 on Instagram, it is clear that Afterpay is quickly gaining popularity across Australia. Afterpay is inevitably a game changer for shoppers chasing a new approach to payment solutions, but what are the pros and cons?



  • Fast and easy approval

The Afterpay account set up and approval process is easy, with the only requirements being that you have to be at least 18 years old and have a valid debit or credit card to link to your account. There are no credit checks and essentially zero wait time in getting approved.


  • Immediate use

Unlike the days of lay-by, Afterpay allows customers to access their purchase before they pay it off. This means that if you buy a product in-store, you can take home your purchase immediately.


  • Automatic payment

If you aren’t good at managing your finances, it may be a pro that Afterpay takes care of repayments for you. Afterpay sets up a direct debit and charges you automatically every two weeks on your payment date. So as long as you have money in your bank account, you don’t need to stress about repayments.


  • Interest-free

Afterpay is interest-free, making it an extremely attractive payment solution for customers. Unlike a credit card or a loan, Afterpay doesn’t charge interest or require a lump sum to be paid at the end of the month.



  • Impulse spending

Although interest-free payment plans are enticing, they can lead to poor spending habits. Spending money you don’t have is an appealing option that can very easily result in a debt trap. Impulse spending while not having an effective budget in place can break your bank and leave you with a product that you can’t realistically afford.


  • Late payment fees

If you miss a payment or don’t have enough money in your bank account for a direct debit, you will face a charge of $10 and another $7 for every week that you still have an outstanding balance. For customers with multiple active payment plans with Afterpay, this can become very expensive.


  • Credit history checks

What most users aren’t aware of is that Afterpay’s terms state that the company and unspecified ‘third parties’ may go through an identity and payment verification process on your account. This means that Afterpay reserves the right to check your credit history and report defaults to credit reporting agencies.


  • Not regulated by the NCC

Afterpay is not regulated by the National Credit Code (NCC), which is designed to enforce ethics and protect consumers in the finance industry. This is because there is no interest charged and it is short-term credit provided across less than 62 days. Therefore, customers using Afterpay lose certain consumer credit protections, including those that require credit providers to assess a person’s suitability for receiving credit before approval.


So, should you use Afterpay? Like any financial product, whether Afterpay is right for you will depend on your personal situation and money management habits. If you have trouble paying your bills or budgeting your finances, Afterpay could make this even more complicated.


In my opinion, the safest way to shop remains to save upfront and pay in full.


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