What Is The Advantage of AfterPay?

tik tok on 24/08/2020 - 14:36
Last edited 24/08/2020 - 14:36

I recently thought of checking out after pay - the way it works is if I use afterpay for a $100 item, I need to pay them 4 equal payments of $25 every week. If I have a credit card, I can still keep that $100 in a savings account, earn a few cents before the billing cycle and pay my credit card the same amount of money and even earn some points.

What is the advantage of AfterPay ?

If a person had the same amount of dedication towards payments, wouldn't just a credit card suffice ?
I understand afterpay as an option for people who don't have a credit card - out of choice. Other than this what appeals to people about after pay ?

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Comments

      • Chef Freeman on 29/08/2020 - 22:46

        Thanks, gotta think about the future

  • imurgod on 28/08/2020 - 07:45

    The advantage for me is that I bought shares in them at around $7

  • frostman on 28/08/2020 - 08:10
    +4

    Afterpay should be banned or regulated as it targets the financially vulnerable and the young.

    It promotes impulse buying whilst masquerading as some solution to life's financial problem of 'Hey, you can wear this lovely outfit now and pay later'.

    Go find 1 person with a decent credit card that uses AfterPay?

    The marketed promises are these catchy words, you will find they probably adhere closer to the young generation.

    • Wear Now, Pay Later!
    • Instant Approval!
    • No Interest, pay at your own time in 6 weeks
    • No Fees when you pay on time (except when you dont)

    Their site primarily show flashy/trendy teenagers/young adults which is the market they're after.

    • dmbminaret on 28/08/2020 - 09:06

      The site has two young people in fashion, sure, but what site doesn't? In addition to that one graphic, there is thumbnails for a multitude of retailers including Barbeques galore, mitre 10 & freedom. These are hardly directed at flashy/trendy teenagers/young adults.

      Additionally, many dentists now offer it for procedures that might be needed for these flashy/trendy teenagers/young adults that may not have credit cards or even health insurance.

      It's simply an option. If it's not suitable for you, don't use it and let the people who want to use it do it freely.

      • frostman on 28/08/2020 - 09:41
        +2

        In 2018, an ASIC report reported $900m in Afterpay debt.

        Based on the rate of debt, by end of this year, it would have amounted to over $1b in debt.

        That is debt our young generation don't need to be in.

        You've completely missed the point by a mile.

        TLDR: Afterpay is an instant provider of a mini-loan, they've removed 'interest' and replaced with with late payment fees to avoid heavy regulation.

        • whooah1979 on 28/08/2020 - 11:00

          A $1 billion debt in a year is nothing. The federal government just printed 200 billion out of thin air in a matter if days.

        • dmbminaret on 28/08/2020 - 11:45

          By debt I'm guessing you mean active accounts with current amounts owing but not necessarily outside of the 8 week schedule.

          If I have $200 in my bank but prefer to pay by installments of 4x $50, am I in debt?

          I am, but I don't see it as debt as we normally refer to unmanageable debt. Huge difference.

          • frostman on 30/08/2020 - 20:28

            @dmbminaret:

            If I have $200 in my bank but prefer to pay by installments of 4x $50, am I in debt?

            Yes technically you are, because if you're driving back home and you get a $500 red-light fine, you're in a for a treat.
            Of scenario 2, you got a $700 Vera Wang dress on Afterpay, 4 weeks later your boss tells your fired, you're done.

            In fact, if you have a $5,000 limit credit card WITH ZERO spending on it, the bank regards it as having a $5K debt when taking it our mortgage.

            Do your research before arguing

            • dmbminaret on 31/08/2020 - 07:00

              @frostman:

              I am, but I don't see it as debt as we normally refer to unmanageable debt. Huge difference

              I did clarify it as debt but not unmanageable debt.

              Read the post before responding.

              • frostman on 31/08/2020 - 15:40
                +1

                @dmbminaret: The whole point of my post is to bring to light, a (loop-holed) financial scam called Afterpay that provides instant micro-loans to teenagers and people on very low incomes. This micro-loan scammer-provider is not as regulated as banks are with Credit Cards and Personal Loans given the nature of the loan amount.
                Lats year, afterpay recorded $250 million profit, most of which come by their main source of income "late payments fee"

                • whooah1979 on 31/08/2020 - 15:48
                  +3

                  @frostman:

                  to teenagers

                  Young adults that are old enough to vote.

                  https://en.wikipedia.org/wiki/Afterpay
                  Customers are required to be over eighteen years of age to use the service.

                • dmbminaret on 31/08/2020 - 17:23

                  @frostman:

                  financial scam called Afterpay that provides instant micro-loans to teenagers and people on very low incomes

                  Additionally, any age group Over 18) on any income (it is not means tested to only provide services to the poor).

                  Yes technically you are, because if you're driving back home and you get a $500 red-light fine, you're in a for a treat.

                  Are these vulnerable teenagers the only ones speeding now? How is this different to any other scenario? If I had just spent my money on making the purchase outright, there is the same comings and goings.

    • SelfMade on 28/08/2020 - 12:43
      +1

      Yes agree to an extent, also though the customers using AfterPay need to take on some of the responsibility.

      I can see this turning out to be the same as the saga with the banks, when customers were happy to borrow funds then cried poor when some couldn't make repayments for whatever reason…especially in that case people borrowing were adults and need to act like adults! You borrow something, you repay it. If you're foolish enough not to know what you're getting yourself into that's a tough lesson for you to learn…that's what some of them should have been told at the royal commission.

    • AustriaBargain on 28/08/2020 - 20:41

      I say it promotes buying higher quality products and all you have to do is save in reverse for 1.5-2 months. Yeah you might have a bit less money from your paycheque while you repay it, but that's what saving feels like. It wouldn't surprise me if Afterpay promotes saving habits, and helps correct people in the habit of not saving anything at all. People who use Afterpay a lot are constantly projecting their budget two months ahead, which has to be a healthy mentality compared to just living in the moment. Some people will be hammered by fees and Afterpay makes a few dozen million dollars in fees every year. But if there were no fees then people wouldnt' repay, it's the same for credit cards. And Afterpay is not worth more than Coles today because of a few dozen million dollars a year in revenue from late fees, not by a long shot. Unlike credit cards, Afterpay doesn't just make money from late fees and interest, Afterpay provides significant value to any retailer who currently doesn't offer Afterpay, because Afterpay has a huge amount of customers all over Australia.

      People buying nicer things than they typically would buy is not a bad thing. People buying fewer things, because they've bought some more expensive things than usual, is not a bad thing either. Quality over quantity isn't always the best fit, but for most consumers I think it is. The fears that Afterpay qualified products would be massively overpriced and rip consumers off was unfounded, as Afterpay is now available everywhere. You can buy basically anything you want on eBay with Afterpay, or at BigW, or JBHifi, etc.

  • Aerith-Waifu on 28/08/2020 - 20:24
    +1

    Only advantage i see is from $1 to $88 today…………………

    Credit card is better if you pay it off every month.

  • lyl-Lychee on 29/08/2020 - 01:29
    +2

    Don't know if anyone has brought it up yet, but I use it like a deposit scheme to monitor my online shopping.
    Pay 25% upfront. Wait until the items arrive. Upon receiving them and seeing they're in good condition, I'm reminded to login to afterpay and pay off the 75% balance.
    If items are bad or stuck in the post, I'm more motivated to send them back or chase it up before the next 25% instalment comes due.

    Yes I know I could do the same thing with a credit card. But interestingly the urgency of the 'next instalment soon' makes me pay more attention to my discretionary shopping on item-by-item basis. Compared to when it's just lumped into the monthly closing balance with all my utilities… I'm more inclined to just keep the defective item or even forget about it.

  • haggertm on 29/08/2020 - 08:29

    I used it once because I did an assignment on it at Uni and wanted to give it a go. Bought a Global meat cleaver that I don't need but have always wanted because they look boss. At first I thought it was great but in the end I just wanted it to be paid. I personally didn't like how long it took, I generally like to pay my bills straight away so I don't have to worry about them. I can see how people can get trapped with it. It's great for the stores because people are more likely to buy more stuff and spend more money when using it.

  • ausmechkeyboards on 29/08/2020 - 09:16

    Holding onto capital is the most important thing you can do.

  • hypie on 29/08/2020 - 11:41
    +1

    The advantage of afterpay is if you invested in shares post covid crash at $12.44, you would have made 713% return on investment.

    Oh and it keeps going up…

    That's the advantage of Afterpay.

    • whooah1979 on 29/08/2020 - 14:45

      Paper profits are not the same as ROI. A trader selling their position on Monday may NET ~$42 to $62 per stock depending on their tax bracket.

    • avoidfullprice on 29/08/2020 - 15:42

      Don't forget just a few years ago, people were chasing the Bitcoin gain

  • Plug on 29/08/2020 - 12:15
    +3

    Afterpay, Buy Now Pay Later, Instant Credit etc are all no good for anyone. Save up, pay with cash. That way you'll never find yourself in a debit hole you cannot get out of. If you can't afford to buy new look at secondhand to tide you over.

    It's all a scheme to squeeze money out of people. If it wasn't profitable for the companies they wouldn't offer it.

  • digitalbargain on 29/08/2020 - 13:14
    +1

    Afterpay is great! …For the shareholders..

    Just like many other tech companies (think Uber eats), they take a big cut of the transaction price.

    Relatively, they don't employ many people. They provide a service and deploy it everywhere through an app.

    And, there's no free lunch here, consumers are paying for this (indirectly), and are businesses that do employ more people.

    I see many people that don't need to use it are; to leverage the time value of money.

    Unfortunately this means those that don't use it are in essance subsidising for those people.

    Everyone should therefore use it for every transaction.

    Level out the playing field, and in the meantime continue to make shareholders money by taking a big cut of every single transaction!

    • cloudy on 29/08/2020 - 21:13
      +1

      Agree with all your points.

      I simply chat to the business, ask for a 5% discount paying with cash or CC. Most do, most are happy to do so, cause -
      A, they take in the same money,
      B they feel as though I will be a more personal and loyal customer with the discount.

  • avoidfullprice on 29/08/2020 - 15:47

    What is the advantage of AfterPay ?

    Psychological advantage. Seeing $25 four times is less scary than seeing $100 in one hit.

    Like some people think deconstructed coffee is much cooler.

  • Jamesrulez1 on 29/08/2020 - 18:24
    +2

    As a user? Time value of money.

    As a shareholder? It's bought me a house and two nice cars at 23.

    • digitalbargain on 30/08/2020 - 15:57

      As a user? I bought a $100 t-shirt I couldn't afford upfront

      I'm 23 too if you couldn't tell

  • [Deactivated] on 30/08/2020 - 09:07

    Credit cards have annual fees.

    • Fobsessive on 30/08/2020 - 12:42
      +2

      Amex Essential is free

      • kerfuffle on 30/08/2020 - 12:47
        +1

        You can't use Amex on Afterpay though.

        28 Degrees Mastercard is also free.

        • Fobsessive on 30/08/2020 - 13:02

          Agreed, but the point of comment was: you can get a free Amex credit card and avoid Afterpay entirely

          • Carmen Sandiego on 23/09/2020 - 09:59

            @Fobsessive: And watch every single transaction with Amex get slugged harder.

            I'll stick to Afterpay, ZipPay, and 28 Degrees

  • karu on 30/08/2020 - 17:29

    A few questions.

    Does Afterpay offer chargeback, consumer protection and extended warranty?

    If you buy something using Afterpay and pay it off with your credit card, can you claim extended warranty?
    I've really only used the cover once… but it was much cheaper than buying a new fridge.
    I do need to look into the price drop protection more…

    When paying off Afterpay balances with a credit card, won't some banks treat it as a cash advance?

    • whooah1979 on 30/08/2020 - 19:00

      Chargebacks are offered by the credit card issuer. Customers may get an extra layer of protection if they pay their afterpay instalments using a credit card.

      Consumer protection is covered by statutory legislation.

    • cloudy on 04/09/2020 - 16:30

      You don’t get to chargeback if you use afterpay,if you use pay your after pay account with a credit card and try to chargeback if something goes wrong you will be threatened with legal action.

      I found someone no ozbargain experienec this. You basically lose all (credit card) protections when using after pay.

  • Kozhutki on 01/09/2020 - 09:27

    To be honest the only reason I use AfterPay or similar services is so I don't see the large amount of money leaving my bank account, I only buy what I can afford but there's something psychological in it for me.

  • dmbminaret on 02/09/2020 - 13:01

    For all you naysayers of afterpay, my partner and I use after pay a lot and both have zippay also. I withdrew super under covid provisions and we have just been approved for a house loan, so whether or not it has a bearing may depend on the lender and of course other factors such as credit and income. It was not one of the big 4, but also not a non conformist lender either. Normal interest rates.

  • [Deactivated] on 06/09/2020 - 00:50

    I love Afterpay and refuse to ever get a CC again.
    Interest rates and fees are enough for me to avoid like VIC.
    Been there, done that.

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