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What is Afterpay?

What is Afterpay?

Afterpay is a type of digital payment option where you buy an item and then pay it later in instalments. Afterpay is gaining popularity in a lot of Australian online and retail stores because it helps customers buy things they can't afford to pay for immediately.

How does Afterpay work?

Afterpay is similar to lay by but the difference is that you can take home your purchase right away. Afterpay can be used at participating online and physical stores.

  • Online: Select Afterpay as your online payment method once you have checked out your item. You will then be redirected to the website. If you’re a first timer you will need to set up your account and provide a few details such as your name and credit card details. You need to have a Mastercard or Visa credit/debit card issued in Australia to access Afterpay.
  • Instore: You will need to log in to the Afterpay website to enter your purchase amount. This will generate a unique barcode which the merchant will need to scan to complete your purchase.

As an example, imagine you want to buy an item priced at $500 but can’t afford to pay the whole price upfront. You can choose Afterpay as your payment method at the checkout. This will let you pay for the item in four instalments. So you will be paying $125 per instalment or 25% of the total amount of per instalment.

You will have to make your first payment 14 days after receipt of the invoice.

How much is it?

If you make your repayments on time, paying with Afterpay has no interest or fees. However, if you miss an instalment you will incur a late payment fee of $10. So it’s important to be mindful of your payment schedule.

If you don’t want the hassle of making manual payments, you can automate your payments on the agreed scheduled dates. Afterpay will take payment automatically from your registered credit or debit card.

It’s possible to make payments before the due date in Afterpay. You just need to login and authorise an early payment online. This can be a good way to clear yourself of debt early and to stay on top of your personal finances.

Final word

Paying with Afterpay is a convenient way to purchase an item you can’t afford to pay for up front at no additional cost. While this new payment scheme may be a more affordable option than using your credit card, it can encourage impulse buying. So it’s best to be careful to avoid the burden of multiple debts.

 
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