If you haven’t heard of Afterpay then you have either been living under a rock, have purchased anything new and exciting, or possibly you are just responsible with your money!
So, let’s start with, what is Afterpay?
Afterpay is a modern-day layby service. The only difference is that you can take your item home, enjoy it and then pay for it over 4 equal payments each fortnight. You can purchase goods from $80 to $1,500 with no interest and this can be done through an approved online business or even instore. Problem is, this can add up quickly, especially with multiple purchases.
Talk about a generation of instant gratification.
Sound too good to be true. Well, this usually means it is. Buying items, you don’t pay for upfront can be a slippery slope to manage. All financial good intentions can go out the window… FAST! If you don’t have the cash to buy it on the spot, should you really be buying it?
After hearing too many cautionary horror stories the Pursue Wealth Dream Team decided to investigate and here are our thoughts:
Pros of Afterpay:
- It’s quick and easy to setup
- It’s trusted by over 840,000 Aussies
- You pay no interest
- You can use someone else’s money, meaning you can keep your money earning interest in your account for longer
Cons of Afterpay:
- Missing payments means you will be fined an additional $10 initially and a further $7 if the payment is not made within 7 days. Suddenly that $40 pair of shoes is now $50 days for being a week overdue. If you didn’t have $40 to buy them upfront, you certainly don’t have $50… eek!
- Fees are capped at the lesser of 25% of the price of the item or $68. How nice of them.
- Encourages impulse buying! Do you really need that item? Future you might disagree with present you.
- Credit checks might be needed – besides stating that you will be automatically approved if over 18 years old
- Spending limitations. We are actually fans of this feature!
- The merchant/ retailer is paying fees to be Afterpay approved
Almost 1 in 3 people surveyed by Mozo admitted to having missed at least one payment and 65% of people made purchases that they wouldn’t normally make. However, we suspect this number is substantially higher.
All in all, our motto is the same when it comes to credit cards as afterpay and any other “enjoy now pay later service”. These are for Finance Masters who can control spending and manage their wealth seamlessly. Therefore, if you do not have the funds, don’t buy it.
If your spending is in hot water or you just have some bad habits you want to shake, don’t feel bashful because we are a ‘judgement free zone’. Reach out to the PW team and take control of your finances and put those funds to good use!