Is Afterpay Making You Poor?

The use of buy-now-pay-later services is putting an increasing number of Aussies in debt, with many unaware of the financial implications of using Afterpay.

With the rise of online shopping has come the rise of buy-now-pay-later services and, less conveniently, an increase in the number of Australians finding themselves in financial trouble.

In a study conducted by Tribeca Financial, many adult participants revealed that they did not know how to budget, failed to pay attention to their debts, and frequently used services such as Afterpay.

Hidden Traps

Although Afterpay appears to make it easier to afford expensive items by allowing consumers to pay them off in installments, the reality is that the price remains the same and in some cases, there can be hidden fees and charges for using the service.

“Afterpay works by splitting the cost of your shop into four equal payments, which are made every fortnight,” Mozo reports. “But if you miss a payment, or don’t have enough money in your account for a direct debit, then you’ll be charged a $10 missed payment fee. If a week goes by and you still have an outstanding balance, you’ll be charged another $7 fee.”

Although Afterpay has recently put a cap on late fees, those who use the app without careful consideration could be faced with additional fees of up to $68. Regardless of what you’ve bought, that’s a whole lot of extra cash that you probably didn’t want to spend!

Use It Wisely

It’s not just Afterpay that is posing a risk to the hip pockets of Australians, with other services like UberEats also to blame for financial stress.

“It’s alarming for people to get into credit debt over insignificant purchases like takeaway food and UberEats,” Tribeca Financial CEO Ryan Watson said. “The debt mounts up, leading to…financial stress for 2 in 5 Australians.”

While research suggests that men are more likely to get themselves into trouble, the arrival of Afterpay and similar methods of payment could spell disaster for anyone who finds themselves making mindless online purchases.

Perhaps it’s worth thinking twice about the reasons for needing to use Afterpay, and assessing whether it is really worth the risk.

Do you use Afterpay regularly? Let us know your thoughts in the comments.

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43 Comments

- - rovermum said
  - 25 Jul 2019
    1:23 pm
I’ve never used it and never will. If I can’t afford something, I don’t buy it. I refuse to go into debt or to create ridiculous habits like this.

- - ella12 said
  - 25 Jul 2019
    12:43 pm
No never have and I doubt I ever will.

- - musicmum said
  - 25 Jul 2019
    1:22 am
No, never used afterpay, but recently I bought a juicer from TVSN which I have never bought from before but they had a good deal on what i wanted and let me pay it off by debiting my account each month without any extra charges. Afterpay is better than credit cards that charge interest as long as you do not fall behind on payments.

- - nealsq said
  - 24 Jul 2019
    10:54 pm
I don’t have any impulse control with shopping so I am glad I don’t have any of these type of payment plans, I pay upfront or go without

- - ashna9 said
  - 24 Jul 2019
    7:51 pm
I love Afterpay and use it at times. It is easy to keep on top of payments if you don’t over spend on it.

- - nadine_hill said
  - 24 Jul 2019
    1:33 pm
I’ve never used it – I prefer to buy only what I can afford, or save up for it. I can see people getting into hardship over this ….

- - rachelvk said
  - 24 Jul 2019
    12:21 pm
It is certainly dangerous and risky getting involved with these type of payment programs.

- - DaffyD said
  - 24 Jul 2019
    9:49 am
I’ve never used it, my rule is if you can’t pay don’t get it

- - CaraW said
  - 24 Jul 2019
    9:00 am
I’ve used Afterpay a few times, however because I don’t like having too many bills I ended up paying the items off within the first couple of weeks. It is good for convenience provided you can budget accordingly and only spend what you can afford.

- - Ellen said
  - 24 Jul 2019
    2:50 am
No we never did and never will. It’s about a mindset: you don’t buy anything until you have the money to do so. I teach my kids the same. My 15yr old spent all of this months pocket money already and wanted to borrow money from me for something she desperately wants. I said no you can wait till next month, only buy when you have the money
- mom90758 replied
  
  24 Jul 2019 , 4:11 pm
  That’s my same philosophy. And it works!
- - mom129591 said
  - 23 Jul 2019
    11:44 pm
No I don’t! I think it could be bad if I did.

- - Life.with.Sassy said
  - 23 Jul 2019
    10:36 pm
I loved Afterpay when I was working because I could buy big ticket items and pay them off but once I started maternity leave I had to delete my account. I can totally see how I could have got myself into some serious financial troubles if I continued to use it.

- - Blossom said
  - 23 Jul 2019
    8:59 pm
I can imagine a lot of people could get themselves in financial trouble using this.
I know one guy who is considering getting his car serviced this way as he has been unemployed due to redundancies , has started another job and his car is 12 months overdue for a service
- musicmum replied
  
  25 Jul 2019 , 1:34 am
  My car is overdue for a service by 4 years, so 12 months is nothing unless you are doing excessive driving.
- - rogue said
  - 23 Jul 2019
    8:11 pm
I use Afterpay heaps. I also keep track of exactly what I am spending and where it is going. I try to pay payments off in advance to wrap up paying quicker. But to me it is a god send. When hubby needs to do an oil change in car, I can break up the $100 hit to the pocket for oil and filter over a maximum of 4 payments. So much easier to work the budget to accommodate $25 repayments rather then find $100 all at once. But I also will not use Afterpay for more than 2 purchases at a time. So I know I can afford it. It saves at Christmas time since I can Afterpay gifts throughout the year without dragging kids to the shops and having them see what I am getting each time. It is all about using in moderation and keeping track of what you can and can’t afford. I also have Zip pay… but have never used it as I prefer my Afterpay since I monitor it easier and adding in a second buy now pay later would risk me getting mixed up and forgetting something.

- - mom93821 said
  - 23 Jul 2019
    7:04 pm
Not interested in after pay.

- - mom90758 said
  - 23 Jul 2019
    6:40 pm
I have no intention of starting to use Afterpay. If I don’t have money to pay for something, I just don’t buy it.
- mom93821 replied
  
  24 Jul 2019 , 4:09 am
  I agree – it is essential to make and stick to a budget and to be financially responsible.
- - our.little.t.house said
  - 23 Jul 2019
    5:56 pm
I love Afterpay! It’s brilliant and so much easier then having to do an instore layby. Sometimes it can be so painful trying to get into town to make your payment, or worse you go to pick it up and the kids see it! I’ve nevwr had a problem with Afterpay, it’s all about limits and keeping track of your spending 🙂

- - mom206279 said
  - 23 Jul 2019
    4:55 pm
I’ve never used it before. If I can’t afford something I can’t have it.

- - skbou said
  - 23 Jul 2019
    4:35 pm
I’ve never used Afterpay, not a fan of paying things off (the mortgage takes care of that).

- - mom152736 said
  - 23 Jul 2019
    3:49 pm
I dont use AfterPay… so glad .. lol