If you’ve been Christmas shopping lately, you’ve probably noticed signs for the payment option Afterpay – it’s easy but is it good for everyone?
Over 700,000 Australians are using Afterpay, and the business has even earned the title of Fintech Organisation of the Year in 2017 at FinTech Australia’s inaugural industry awards.
It works by simply entering your details at the checkout online or in-store to go on an interest-free payment plan of four fortnightly instalments, and you get your item straight away.
That’s the dream.
Afterpay is layby for the modern, on-the-go woman.
No more ordering those Christmas presents months ahead on layby, going in-store to make the payments, and waiting until it’s fully paid off to take the item home.
Plus if you get caught up and find yourself stuck for a last-minute gift, there’s no need to stress if you can’t actually afford that perfect gift right now. Afterpay is an alternative to saving up ahead of time or using a credit card, and it’s interest-free.
But while it’s tempting to take advantage of technology like Afterpay, where your payments are organised automatically, that doesn’t mean it’s always a good idea.
Afterpay encourages impulse shoppers.
The main problem with Afterpay is that it’s just so damn tempting to buy something on impulse, when it doesn’t fit into your budget.
Because really, just because the option to buy it now is there, doesn’t mean you should be spending that money.
If you had the lump some of the order in your bank account right now, would you spend it? The answer is often: probably not.
Making small payments can seem a little less damaging to your savings account, but it does add up to the same amount of money in the end.
It might be a good idea to create a limit for yourself on the amount you can spend with Afterpay, just as you would in a budget, to avoid over-spending.
Afterpay will hike up the bill if you miss a payment.
It’s risky enough locking yourself into a payment plan you can barely afford, let alone being charged late payment fees if you fail to pay.
Afterpay customers may be charged $10 if your payment doesn’t go through, and an additional $7 fee if you still haven’t paid within the next seven days!
So it’s definitely worth considering in your budget as to whether you have the cashflow to be making fortnightly payments.
You can always make additional repayments though – so just log into your Afterpay account and pay off some of your bill when you have a little extra cash.
