Afterpay: Steph Nash
Shopping online has never been easier – just don’t get carried away
We’d all very much like to think we know ourselves when it comes to spending and saving. You might get yourself into a fairly good routine ... that is, until a new credit card comes along. An alternative, Afterpay, is everywhere at the moment. It’s an incredibly smart concept: think your traditional lay-by facility managed from your smartphone. It’s like a zero-fee, interest-free credit card without the plastic.
How it works
Afterpay enables you to break up your purchase into a payment plan, as you would if you were using a lay-by facility. But you don’t have to wait the full term to receive your item – once you place the order, consider it yours. You then have eight weeks to pay off your purchase, with the cost broken down into four equal payments. No fees and charges apply and no interest is payable. A few retailers also allow you to use Afterpay in store. To do this, you have to select a spending amount using the Afterpay website and download a barcode to use at the counter.
As it stands, there is no official maximum spend using Afterpay. However, big-ticket items are likely to need official approval. The company website states that the more frequent, successful purchases you make, the more likely you are to be able to spend more.
Take it slowly
The first thing I noticed when I opened my account was how it changed my spending behaviour. I usually set aside a specific amount each week to put towards a splurge item – if it’s not in today’s budget, I’ll wait a week or two until I’ve allocated enough to buy it. With Afterpay, it’s so easy to get carried away. It’s much more budget-friendly to spend $100 each fortnight for eight weeks, as opposed to a $400 lump sum that you’d have to save over a few weeks. And on the payment plan, you don’t have to wait and risk the item going out of stock. But don’t go overboard. It really is like a credit card in disguise, so be on the ball and go steady on the spending.
Read the fine print
Don’t get lazy with your account – that’s when things start to get murky. When you make a purchase, you will receive your payment schedule. You have until 11pm on the due date to make your payment. If you don’t make the cut-off, you will be charged a $10 late fee and a further $7 if the payment is not made within seven days. At first glance, this appeared to be as serious as it gets. However, the terms and conditions state that by using the product you acknowledge that Afterpay reserves the right to report any negative activity on your account, including late or missed payments defaults or charge-backs, to credit reporting agencies. You don’t want this to affect your credit file, so it’s important to treat Afterpay as a serious financial product.
Another thing you should know is that your big data might be given to other companies. The terms and conditions state that by using the product, you authorise Afterpay to disclose “information in relation to you or your account” to third parties.
Returns and refunds
When you purchase an item, you authorise Afterpay to make the payment on your behalf. But exchanges and refunds must be organised directly with the retailer. My tip is to investigate the retailer’s customer policy before you use Afterpay. Check whether items purchased online using the service can be exchanged, or a refund obtained, in store, and on what terms the retailer can issue a refund.
I had a slight hiccup purchasing sneakers online from Platypus. While the company policy stated that I could exchange items purchased using Afterpay in store, refunds would need to be sent back to their warehouse and handled online, which can be time-consuming and frustrating (especially if you have to pay for postage). When the item is refunded, the retailer has to contact Afterpay to stop all future payments for this purchase.