Afterpay Review

Pay-in-four financing at retailers with no interest

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Afterpay

Afterpay

Our Take

Afterpay is a good no-interest option for buy now, pay later (BNPL) shoppers. It does not require a credit check and payments can be made through your debit or credit card.

  • Pros & Cons
  • Key Takeaways
  • Company Overview
Pros & Cons
Pros
  • No credit check required

  • Does not charge any interest on purchases

  • Caps late fees at 25% of purchase amount

Cons
  • Charges late fees

  • Does not offer other financing options

  • Afterpay may decline your purchase

Key Takeaways
  • Afterpay offers pay-in-four financing with no interest.
  • No fees are charged as long as payments are made on time.
  • There are thousands of retailers to choose from in North America.
  • Top customers use Afterpay an average of 24 times per year.
Company Overview

Afterpay is a global leader in the buy now, pay later space with over 19 million active customers in North America, Europe, U.K., Australia, and New Zealand. It was founded in Sydney, Australia, in 2014 by Nick Molnar and Anthony Eisen and went public on the Australian public market (ASX:APT). Afterpay has since grown to be a top 20 ASX company with a market cap of nearly 30 billion AUD.

There are thousands retailer partners across the world for customers to shop at. Afterpay launched in the U.S. in 2018 and quickly reached five million active customers by 2020. By 2021, it had over 10 million active customers in North America.

  • Credit Limit Credit limits start at $500
  • Amount Due at Purchase 25%
  • Repayment Terms Pay 25% every 2 weeks
  • Interest 0%
  • Credit Check Required None
  • Minimum Credit Score No minimum score
  • Late Fees $10; additional $7 if payment is unpaid 7 days after the due date
  • Other Financing Products None
  • Company Website www.afterpay.com

Afterpay is a popular buy now, pay later app that is used by more than 19 million customers around the world. It offers a simple financing solution that breaks a customer's purchase down into four smaller payments. There are no interest charges, and as long as you pay on time, there are no fees.

U.S. customers can browse and shop retailers online or through the Afterpay app. Afterpay does not check your credit and therefore does not report your account to the credit bureaus. Instead, you start out with a small spending limit that grows based on responsible use and on-time payments.

Pros Explained

  • No credit check required: When opening an account with Afterpay, there are no hard inquiries on your credit. This means that those with bad credit or little credit history will not be affected by their low credit score.
  • Does not charge any interest on purchases: Afterpay's pay-in-four financing does not charge any interest. Your purchase amount is broken down into four payments, with 25% paid immediately. The other 75% is paid in equal installments every two weeks over the next six weeks.
  • Caps late fees at 25% of the purchase amount: Late fees can quickly add up if you have trouble paying your account on time. Afterpay's late fees are not cumulative and will never add up to be more than 25% of your original purchase amount.

Cons Explained

  • Charges late fees: If you do not make your payment on time, you will be charged a late fee of $10. Payments that are not made within seven days of the due date are charged an additional $7. These fees can add up, but will not be more than 25% of the original purchase amount.
  • Does not offer other financing options: Afterpay only offers pay-in-four financing, so if you need more time to pay off your purchase, you should consider other BNPL apps.

How It Works

Opening an account with Afterpay requires basic personal information. Simply enter your email, phone number, address, date of birth, and debit or credit card number. You do not have to provide your Social Security number, and there is no credit check.

What You Need to Know

Not needing to provide a Social Security number means no credit check.

You'll be provided a small spending limit to start out with. Many new accounts start out with a $600 limit, and the limit gradually increases over time based on how you use it and with on-time payments.

If you pay late, you will be charged a fee and your account will be frozen for new purchases until you bring your account current. Your account is never reported to the credit bureaus. On-time payments will not improve your score, and late payments will not hurt it.

Although you will pay a fee for late payments, Afterpay is a good financing option for people who have trouble paying on time because it won't negatively impact your credit score.

Interest and Fees

Afterpay buy now, pay later loans never charge any interest. These loans are interest-free with a 25% payment upfront and 25% payments every two weeks until the loan is paid in full.

There are no fees on any Afterpay loan as long as you make your payments on time. If you do pay late, late payments are fixed, capped, and do not accumulate over time. Customers pay a $10 late fee, plus an additional $7 if the payment is not current after seven days. Late fees are capped at 25% of the original purchase amount, so small purchases will not get overwhelmed with late fees that end up costing more than what you bought.

Don't let late fees up to 25% get added to your account.

If a payment is late, customers will not be able to make additional purchases until the account is brought current. Late payments are never reported to the credit bureaus. 

Approval Process

Signing up for an Afterpay account is simple and does not require a credit check. The application only requires your name, email address, phone number, home address, date of birth, and payment method (debit or credit card).

New customers are approved for lower limits that gradually increase over time based on how you use the account and your on-time payments.

Mobile App

Customers can shop online or through the Afterpay mobile app. Its app is available for both Apple and Android devices and it is very highly rated by those who use it. Popular brands include Banana Republic, Puma, Old Navy, Clinique, and American Eagle.

When shopping through the mobile app, you can make purchases with Afterpay's pay-in-four financing option. You'll pay 25% immediately through your debit or credit card on file, then the rest is split into three payments that are made every two weeks.

Not only can you browse and shop in the app, but you can review previous orders, make payments on open loans, and personalize your experience. You can also change your payment method and track your deliveries through the app.

Customer Service

Afterpay customer service is online seven days a week, so you can get in touch with them online and receive a quick response. If your issue requires more attention, Afterpay will call you.

Customer Satisfaction

Afterpay's online reviews display both positive and negative experiences. Many of the complaints that we reviewed dealt with issues regarding refunds or problems with receiving items. To be fair, some of the complaints should have been directed to the retailer rather than Afterpay. These complaints highlight the fact that buy now, pay later services do not have the same consumer protections as credit cards do, such as being able to easily dispute a transaction when you are dissatisfied.

Although some customers are unhappy with Afterpay's service, its top customers use its financing 24 times per year. For the negative experiences, what is impressive is that Afterpay typically responds to reviews in 24 hours or less, which shows their willingness to address complaints right away.

Other Services

Afterpay does not provide any other types of products other than pay-in-four loans.

Competition: Afterpay vs. SplitIt

Afterpay and SplitIt are both buy now, pay later apps that are good for people with bad credit or little credit history. Neither app performs a credit check, nor do they report your transaction history to the credit bureaus.

SplitIt is a good choice for consumers who have credit cards with available credit. The entire purchase reduces your available credit with an "authorization hold," but the actual charges post only on your scheduled due date. This makes it easier to avoid paying interest on your purchases because you can choose a payment schedule that works for you, ranging from three to 24 payments.

Our choice between Afterpay and SplitIt is Afterpay. Many shoppers choose buy now, pay later services because they want to avoid using credit cards and the related interest charges. Afterpay does not charge any interest and does not require a credit card to complete a transaction.

  Afterpay SplitIt 
Credit Limit Credit limits start at $600 Based on your existing credit cards
Amount Due at Purchase  25%  First payment 
Repayment Terms  25% every two weeks  From 3 to 24 payments 
Interest  None  None 
Credit Check Required  No  No 
Minimum Credit Score  N/A  N/A 
Late Fees  $10; additional $7 if payment is unpaid 7 days after the due date  None 
Other Financing Products  None None 
Final Verdict

Afterpay is a solid choice for pay-in-four financing for consumer purchases. The app does not require a credit check and its spending limits grow over time with responsible use and on-time payments. There are thousands ofretailers in North America to choose from and you'll never pay interest or fees on your purchases as long as you pay on time. If you do pay late, there is a small fee, but the late payments will not be reported to the credit bureaus.

Methodology

To review the Afterpay buy now, pay later app, we analyzed publicly available information from its website, mobile apps, and other relevant sources. Our review focuses on the features that we consider most important to readers as they consider using a BNPL service to finance their purchases. Data points related to interest rates and fees, credit limits, repayment terms, credit requirements, app features, and more were gathered to provide the most up-to-date details. This information is updated regularly to ensure that readers make an informed decision when financing purchases.

Article Sources
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  2. Stockhead. "Afterpay Just Joined the Top 20 ASX Stocks; How Many Others Were Once Small Caps?"

  3. MarketWatch. "Afterpay Ltd."

  4. Afterpay. "Five Million Strong: Afterpay Reaches 5 Million Customers in the U.S."

  5. TechCrunch. "Afterpay Unveils BNPL Subscription Offering for US Customers."