Afterpay Review: How It Works, Fees and Is It Worth It?

Afterpay is a buy now, pay later (BNPL) platform that lets you split purchases into manageable amounts that won't wreck your budget. The service can help free up cash flow by breaking purchases into four installments, offering alternatives to traditional borrowing options like personal loans. Find out more about how Afterpay works and whether it could be a good fit for you.

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Afterpay: At a Glance

• What is it: Afterpay is a BNPL service that allows individuals to divide their purchases into monthly installments or financing.

• Payment cadence: Payments are typically due every two weeks after the initial purchase.

• Interest and late fees: Annual percentage rates (APRs) for monthly financing go up to 35.99%, and late fees may be charged if payments are delayed.

• Approval type: Afterpay is transaction-based, and approval is based on each purchase.

• Credit reporting: No reporting, but if you default and your account goes into collections, it will be reported.

• Typical starting limit: Afterpay states that new accounts begin with a low spend limit. Expect limits to start around $100.

What Is Afterpay?

Afterpay was founded in 2014 and now serves more than 20 million users. The platform operates in the U.S., the UK, New Zealand and Canada. Afterpay is a BNPL service that partners with over 348,000 global retailers, allowing shoppers to split purchases into smaller payments over time.

How Afterpay Works

Afterpay works with Pay in 4 or monthly financing.

Pay in 4

• You can choose to pay in four installments over six weeks.

• Payments are typically due every two weeks after the initial purchase.

Here's a quick example of how a $200 purchase would work with Pay in 4:

Monthly Financing

• You can elect to pay monthly with terms ranging from three to 24 months. Interest accrues daily for monthly installments.

• If you pay month-to-month, you may pay interest rates. These vary and are disclosed at checkout.

Afterpay Costs and Fees

Here’s a breakdown of Afterpay costs and fees:

Eligibility and Availability

• Age requirement: You must be 18 years or older to use Afterpay.

• Supported countries: Afterpay is available in the United States, Australia, Canada, New Zealand and the UK.

• Payment methods: Afterpay accepts credit and debit cards from Mastercard and Visa, as well as Cash App Card and U.S.-issued checking accounts.

• Approval basics: Approval is not guaranteed and is based on each individual purchase.

Pros and Cons of Afterpay

Like any payment service, Afterpay comes with benefits as well as trade-offs.

How To Sign Up and Use Afterpay

One convenient feature of Afterpay is that you don’t necessarily need to create an account before making a purchase. You can choose Afterpay as your payment method at checkout and follow the prompts to sign up during the transaction.

If you’d rather create an account ahead of time, you can do so through the Afterpay app or website. Here’s a step-by-step guide.

Signing Up for Afterpay

1. Download the Afterpay app on your phone.

2. Create an account by entering your legal name, phone number and email address. You must be at least 18 years old and live in the U.S. or Canada.

3. Verify your identity for a soft credit check. You’ll likely be asked to provide the last four digits of your Social Security number.

4. Link a payment method, such as a bank account, credit card or debit card.

Using Afterpay

You can select Afterpay as your payment method at checkout and follow the prompts to choose your payment plan. The first installment is typically due at the time of purchase.

If you’re shopping in-store, open the Afterpay app, find the retailer and generate your one-time virtual card. You can add it to Google Pay or Apple Wallet and complete your purchase.

Afterpay vs. Other BNPL Apps

To see whether Afterpay is the right fit, it helps to compare the BNPL platform with similar services:

Who Afterpay Is Best For

• Millennials and Gen Z shoppers

• Budget-conscious shoppers

• Those who prefer not to use a traditional credit card

• Shoppers who want quick approval at checkout

Final Take

Afterpay may be a good option for shoppers who want to avoid a hard credit inquiry and prefer instant approval at checkout. It offers 0% interest when purchases are split into four installments, though longer monthly plans come with an APR and daily interest.

Whether it makes sense depends on how you plan to use it:

• Yes if: You can pay your balance off in four installments with 0% interest.

• No if: You expect to miss payments or rely on longer-term financing with interest.

Afterpay FAQs

Here are answers to some of the most common questions about Afterpay and how the BNPL service works.

Is Afterpay legitimate?

Afterpay is a well-known BNPL service that is widely used.

Does Afterpay charge interest?

If you opt for the Pay in 4 and pay on time, Afterpay will not charge you interest.

What happens if I miss a payment?

Afterpay will pause your account until you catch up with your payments. There may be late fees that are charged.

Can Afterpay send you to collections?

If you have late payments that are outstanding for some time, they can send your account to collections.

How much can I spend with Afterpay?

Afterpay payment limits start low, but may increase as you establish a consistent paying history.

Does Afterpay do a hard credit check?

Afterpay only performs a soft credit check. They do not perform a hard credit check.

Does Afterpay report to credit bureaus?

Afterpay doesn’t report to credit bureaus. However, if your account is moved to collections, this activity will be reported to the credit bureaus.

What’s the minimum purchase?

Afterpay doesn’t specify a minimum purchase amount, it depends on individual retailers.

Can you change payment dates?

Afterpay does allow you to shift payment dates, but there are restrictions.

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