Coming into the silly seasons, here’s what you need to know about those buy-now-pay later schemes to avoid falling into the black hole of debt! Most retail stores offer buy-now-pay later terms through providers such as Afterpay, as these are far more enticing payment option than LayBuy or credit cards.

But aren’t we just being lured into a false sense of financial security?

At least Laybuy used to make you pay off the item before you received your goods and credit cards had a bad enough reputation from your parents you’d at least think twice before making a large purchase. But, Afterpay where do you draw the line?

Afterpay encourages impulse purchases and disguising the cost by allowing consumers to break down the cost into x4 instalments and let’s face it, 4 x $25 sounds a whole lot better than $100.

How does it work?

As the name suggests, you take the item home on the spot and pay for it later in 4 equal fortnightly instalments. Afterpay is interest free and no application fees with repayments made automatically.

Pro’s

  • Quick Account Set Up
    • All you need is basic account details to set up and consumers can use Afterpay straight away. No checks from the bank, provided your are > 18 y.o)
  • Immediate access to your purchase (unlike Laybuy items)
  • Available in store and online
  • Interest “Free”
    • No interest on repayments and no application fee, make Afterpay a better pick for Millennials than credit cards
  • Organising automatic repayment from nominated debit/credit card

Con’s

  • No excuse not to buy on impulse!
    • Sometimes an item not on sale or waiting until next week’s pay to purchase an item can be a blessing in disguise.
  • Encourages poor spending habits
    • 4 x payments of $100 sounds affordable at the time, but it is still a $400 purchase that you may not have really needed. If you had $400 cash would you still have purchased it?
  • Non-payment fees
    • Although no interest or application fees, if the scheduled payments do not clear Afterpay can charge late payments.

As long as you meet the fortnightly repayments and purchase items you can realistically afford and actually have use for (and not on impulse) there is no reason why Afterpay can’t work in your favour.

But like all good things, use Afterpay in moderation. It’s still okay to save up for things you want.

With the silly season upon us, just remember your family and friends don’t need extravagant presents, just your extravagant presence will be enough.