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Business Insider's personal finance team compared Afterpay to the best buy now, pay later loans and found it to be an industry leader. Afterpay is an excellent choice for borrowers who would like to make a purchase and spread out the cost over several payments, especially if you don't want to pay interest. However, make sure you're able to budget for and afford the item before buying through Afterpay.
0% Late fee of $8 if you miss a payment by 10 days or more, cap on the total late fees on your purchase to 25% of the order's value Undisclosed Check mark icon A check mark. It indicates a confirmation of your intended interaction. Only soft credit credit check needed Check mark icon A check mark.
It indicates a confirmation of your intended interaction. No interest on purchases Check mark icon A check mark. It indicates a confirmation of your intended interaction.
Excellent mobile app Check mark icon A check mark. It indicates a confirmation of your intended interaction. Can use with thousands of retailers con icon Two crossed lines that form an 'X'.
Late fees con icon Two crossed lines that form an 'X'. Not all orders are approved con icon Two crossed lines that form an 'X'. Only one repayment term option Repayment is split over four interest-free installment payments The amount of credit available to you depends on your history as a Afterpay customer and if you've been making payments on time Afterpay doesn't report your payments to credit bureaus Need to be a resident of a US state or Washington, DC Afterpay Overview Afterpay is a buy now, pay later (BNPL) lender that allows you to spread out the cost of an item over a series of installment payments.
You'll make the first of four payments when you purchase the item, then will pay off the rest over six weeks. Your payments will be due every two weeks. Depending on the cost of your order, the merchant you buy from, and the state you live in, you may be able to access longer-term financing from Afterpay, giving you the ability to pay off a purchase over six or 12 months, but you'll owe interest with this option.
You will choose Afterpay as your payment method when checking out at your preferred retailer. You can use Afterpay in the app, on a retailer's website, and for in-person shopping. There are thousands of retailers that allow you to use Afterpay at checkout, including Adidas, Lululemon, Ulta Beauty, and Levi's.
There's no cost to use Afterpay — as long as you make on-time payments. If you don't pay more than 10 days after the due date, you'll fork over a late fee of up to $8. You may pay more late fees if you continue to make delayed payments, but the total sum of the late fees you can pay on a specific purchase is capped at 25% of the order's value.
Importantly, Afterpay doesn't approve 100% of orders and instead considers several factors before giving your purchase the green light. For instance, the longer you have used Afterpay, the more likely you may be to have a purchase approved. The amount you have to repay and the number of orders you currently have open with the company also factor into the lending decision.
Afterpay may conduct a soft credit check when you sign up for the platform. A soft credit check allows a lender to see your credit history without impacting your credit score . Some lenders use a hard credit inquiry , which does impact your credit score.
Buy now, pay later payments also will not affect your credit score, as Afterpay doesn't report them to any credit bureau. To use Afterpay, you need to be a resident of a U.S.
state or Washington, DC. You also need to be at least 18 years old (or 19 in Alabama) and provide a few pieces of contact information. If you decide to use Afterpay's other six- or 12- month installment payment service, you will go through a similar process but must spend at least $400 to qualify.
There are no late fees or origination fees, but you will pay interest. Afterpay Features Afterpay's standard delayed payment plan gives you six weeks to pay off your purchase without incurring any interest charges or fees. The amount you end up paying after using the service remains the same as the total cost of the items you bought at a participating retailer's website or store.
That's because Afterpay primarily makes money through the merchant fees it charges companies, which equal a certain percentage of each transaction. Afterpay typically splits your purchase into four equal installment payments due two weeks apart. You make the first payment when you checkout and the remaining three over the next six weeks.
But there is some flexibility to change that schedule to better suit you. For instance, you can pay off your buy now, pay later plan ahead of time and the company won't charge you any fees for doing so. Or, you can set a preferred payment day, which moves your payment due date to a different day of the week selected by you.
So if you bought something on a Monday, but selected Friday as your preferred day, the subsequent three payments would be due on Fridays, increasing your overall payment timeline by four days. If you need a little extra time to pay, you may be able to move the due date for one part of your payment. You typically cannot reschedule the first or last payments through the website or app and will need to go through one of its customer service reps.
If your payment is already overdue or due within 24 hours or you're a brand new customer, you cannot move the due date. Afterpay offers a robust and well-reviewed app to its users that lets them control much of their experience, from tracking payment dates to browsing through items from its hundreds of participating retailers. To make a purchase through Afterpay at a physical store, you can use its digital card.
You'll need to set up the card in the app's in-store tab and then add it to your Apple Wallet or Google Wallet to make a contactless payment when checking out. The Afterpay app will show you the maximum amount you've been preapproved to spend on your Afterpay card. Afterpay Pros and Cons Advantages Only a soft credit check is required.
A soft credit check will not impact your credit score and is solely used to help Afterpay make a lending decision. This credit check will allow Afterpay to set your initial spending limit. Spread out payments over six weeks.
You'll make your first payment equaling one quarter of the order value when you purchase an item, then a payment every two weeks after that until you've paid 100% of the item's value. If you don't have all the cash up front to buy what you want, this could make the item affordable. Doesn't charge interest on purchases.
You won't pay any interest to use Afterpay's service. The only fee you'd face is a late fee if you fall behind on payments. Easy to shop on the mobile app.
Afterpay's mobile app is extremely well reviewed on both the Google Play and Apple stores. You're able to manage your payments from the app as well as browse products from different companies. Available with thousands of retailers.
You may be able to use Afterpay at most of your favorite stores. Late fees. Afterpay charges a relatively small late fee of $8 if you miss a payment by 10 days or more.
If you continue to pile up late fees, Afterpay caps the total late fees on your purchase to 25% of the order's value. Not all orders are approved. Afterpay is "committed to ensuring [it] supports responsible spending," according to its frequently asked questions page.
If the company deems you ineligible to use buy now, pay later because of your financial situation, you'll have to either find a different way to afford your item or choose not to buy. Lower spending limit. Compared to what you can charge with a credit card, Afterpay's initial maximum spending limit of $600 is on the small side.
This can be good for managing repayments but limiting if you'd hoped to use the service for bigger-ticket items or for multiple orders simultaneously. How to Use Afterpay To get started, you'll create an account with the company either by downloading the app or visiting the Afterpay website. If you're already online shopping, you can choose Afterpay at checkout before even registering.
You'll receive an instant approval decision. Afterpay takes a number of factors into account when deciding if you qualify, including your credit history. For those that access Afterpay first through a retailer, you'll need to visit after.
com or the app to set up a password and complete your account. To set up an Afterpay account, you must be at least 18 years old, a resident of the U.S, and pass certain identity checks.
You'll need to provide a verifiable email address and mobile telephone number; valid U.S. delivery address, and the details or a debit or credit card you are authorized to use.
Once the account is set up, you can visit one of Afterpay's partner retailers or shop through the app. When you're checking out, select the Afterpay option from the payment choices and log into your account to complete the transaction and have your order total split across four payments. Afterpay makes it easy to keep track of when payments are due.
It sends reminders out via text and email before the bill's due date and allows users to view their payment schedules anytime on the Afterpay website or mobile app. You can also enroll in automatic bill pay, if you don't want the hassle of remembering to log into your account and make the payment yourself. This option lets Afterpay deduct the outstanding payment from a designated bank account, debit card or credit card on the due date.
You don't need to pay anything to sign up or use Afterpay. The company charges no upfront costs, origination fees, or interest for completing purchases through its buy now, pay later service. You can incur late fees, though, if you miss the due date for one or more of your four scheduled repayments by more than 10 days.
If you opt for its six- or 12-month repayment plan, you will face no late fees or origination fees, but owe interest. If you fail to make one of your installment payments and it becomes overdue by 10 days or more, Afterpay charges a $8 late fee. Continue skipping payments and you'll rack up additional fees equal to as much as 25% of the order's total value.
Afterpay will also pause your account when you miss a payment, preventing you from using the service to buy anything else until you've repaid what you owe. 0% Late fee of $8 if you miss a payment by 10 days or more, cap on the total late fees on your purchase to 25% of the order's value Undisclosed Check mark icon A check mark. It indicates a confirmation of your intended interaction.
Only soft credit credit check needed Check mark icon A check mark. It indicates a confirmation of your intended interaction. No interest on purchases Check mark icon A check mark.
It indicates a confirmation of your intended interaction. Excellent mobile app Check mark icon A check mark. It indicates a confirmation of your intended interaction.
Can use with thousands of retailers con icon Two crossed lines that form an 'X'. Late fees con icon Two crossed lines that form an 'X'. Not all orders are approved con icon Two crossed lines that form an 'X'.
Only one repayment term option Repayment is split over four interest-free installment payments The amount of credit available to you depends on your history as a Afterpay customer and if you've been making payments on time Afterpay doesn't report your payments to credit bureaus Need to be a resident of a US state or Washington, DC Afterpay Alternatives Several other companies, like Affirm , Klarna , Sezzle, Splitit, and PayPal, offer a similar "pay in four" option, where you pay for your item over four installments spread across six weeks, like Afterpay does. Additionally, each company boasts a roster of thousands of companies they have partnered with, making buy now, pay later accessible for many different types of purchases. Affirm, PayPal, and Splitit do not charge any late fees like Afterpay does.
Late fees could add to the total cost of your borrowing, so set up a proper budget to make sure you don't fall behind. Afterpay is best for customers who want to spread out the cost of their purchase over multiple paychecks. You'll make Afterpay payments every two weeks, which syncs up well with a bi-weekly pay period.
Unlike other lenders and credit cards, the company also doesn't charge interest — a major benefit for many borrowers. The $600 maximum spending limit for initial customers means Afterpay will work best for shoppers looking to afford smaller purchases rather than big-ticket items like furniture or expensive tech. Afterpay User Reviews and Experiences The Afterpay app has a 4.
9 star (out of 5) rating on the Apple app store and a 3.8 star rating on the Google app store, with many users praising the easy set up, lack of a hard credit check to qualify, and no-interest financing. Be careful.
Buy now, pay later programs might entice you to buy something you may not realistically be able to afford. Just because the bi-weekly payments look small doesn't mean the total cost isn't still significant. One study of almost 11 million people's bank and credit card data found that people paid at least $176 more per year in overdraft fees, credit card interest and late fees after starting to use buy now, pay later services like Afterpay.
Some users have also expressed frustration with customer support received and the timeline of the refund process when an order is canceled or returned. How trustworthy is Afterpay? Afterpay is rated an A+ by the Better Business Bureau, a nonprofit organization focused on consumer protection and trust. The BBB determines ratings based on a company's response to customer complaints, honesty in advertising, and openness about business practices.
Keep in mind that BBB ratings don't always guarantee you'll have a good relationship with the lender. Afterpay only has a 1.13 star rating out of five on the site currently.
Talk to friends and family who have used the company to get a fuller picture of Afterpay. Why You Should Trust Us: How We Rated Afterpay Business Insider evaluates buy now, pay later services equally, using a rating system that considers a range of factors from fees to customer support. We highlight the strength and weaknesses of each company in our guides as well as compare them with others that are available so you can decide which BNPL plan suits your needs best.
Afterpay Frequently Asked Questions Afterpay is a buy now, pay later service that allows you to make purchases and pay for them in four equal installments, interest-free, over six weeks. Afterpay charges late fees if you miss a payment, but there are no upfront fees or interest charges. Using Afterpay will not affect your credit score.
The company does not perform credit checks and does not report your payment history to any credit bureaus. Hundreds of major online and in-store retailers accept Afterpay, including popular fashion, electronics, beauty, and home brands like Zara, Fenty Beauty, Nordstrom, Old Navy, Wayfair, and The Container Store. Yes, Afterpay is safe to use.
It uses secure encryption to protect your personal information and payments..
