Afterpay is a buy now, pay later (BNPL) service that offers interest-free payment plans. It was launched in 2015 in Australia and appeared in the United States in 2018. Since then, it has become extremely popular. More than 13 million people in the United States have used Afterpay, and the value of products sold nationwide reached $2 billion in November 2020, according to a press release from Afterpay in December 2020.
How does Afterpay work?
Afterpay allows you to set up payment plans during the checkout process for many merchants. These plans are generally structured the same way: the purchase amount is divided into four payments made every two weeks over six weeks, with the first payment due at checkout. You can also use the Afterpay mobile app to set up an Afterpay card for contactless payment in-store at select merchants.
Is there a minimum purchase amount when using Afterpay?
Afterpay does not set a minimum purchase amount, but there may be a minimum at some stores. You will need to check the minimum amount required by the store.
Is there a maximum purchase amount when using Afterpay?
Yes. The maximum amount you can spend with Afterpay will change based on how you use your account. Afterpay does not specify what this maximum will be, as it varies from customer to customer. If you are a good-standing customer who has used Afterpay for some time, your maximum will be higher. If you are a new customer or have a history of late or declined payments, your maximum will be lower.
Are products purchased with Afterpay shipped after the first payment?
Yes. The first payment is made upfront. After that, your online purchases will be shipped normally, just as if you had used a credit or debit card for payment.
Can I use Afterpay to pay bills?
It depends on the bill and how you pay it. To pay a bill in person, you will need to download the Afterpay app. This gives you access to the Afterpay card, which allows you to spend money just like you would with a credit card.
Is there a credit limit with Afterpay?
If you apply for an Afterpay card, your approved credit limit will be shown to you. On the other hand, if you use Afterpay to pay for an item directly from a merchant, the rules work slightly differently. You can only use Afterpay for purchases up to around $150 the first time you use the service.
How does Afterpay affect your credit score?
Since Afterpay is an interesting service, you may wonder how it impacts your credit report and credit score.
Does Afterpay check credit?
No. According to Scala, the service does not perform any type of credit checks, even soft credit checks, so it does not look at your credit score or credit history. Instead, Afterpay manages its risk by initially approving you for small orders. Once you prove to the company that you can manage your debt, your requests to spend more may be approved.
Does Afterpay report your activity to credit bureaus?
Afterpay does not report your payment activity to credit bureaus, even if you make late payments, according to Scala. This means that paying late with Afterpay will not affect your credit score.
Source: https://www.thebalancemoney.com/what-is-afterpay-5185062
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