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Split your next shopping cart into 4 payments with Afterpay

Pay off your online purchases over time with no interest or fees


Afterpay lets users split their shopping carts into four equal payments without any interest charges – but is it the best payment option for you?

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If you’ve ever wanted to pay off a purchase over time, whether it be a bigger purchase or just an online shopping cart you don’t have the funds for at the moment, you might have opted for a merchant installment plan or credit card payment – racking up interest as you pay it down.

Now, you have another option. Alternative installment plans are gaining popularity – allowing users to pay off purchases over time for less than a credit card. Some are offered by credit card issuers – like American Express “Pay It Plan It” – while others are individual services that partner with popular retailers.

One of the most popular options currently available is Afterpay, which doesn’t charge any interest at all. It is designed for shoppers at thousands of retailers to break their payment out into four equal installments and take some sting out of the checkout line.

As rewarding as this sounds, there are a few potential drawbacks that come with choosing Afterpay as your payment method. Read on to see just how this service works and its pros and cons.

What is Afterpay?

Afterpay is a unique payment installment service that breaks up payments at participating retailers into four equal parts over six weeks. Rather than charge usage fees or interest rates, Afterpay charges the merchant to use their product, making it easier to take some of the burden off the user.

At a presentation at the SXSW 2019 Conference, Nick Molnar – co-founder and CEO of Afterpay – described the service as rooted in trust.

“Trust is at the cornerstone of everything we do. These new-age technologies that have grown really quickly – those are driven at core around the principle of trust,” Molnar explained. He said placing trust in the end-user empowers them to fulfill that trust and be loyal to the product.

Based on this idea, Afterpay is designed to reward users for good behavior. Instead of charging anything up front, Afterpay only charges fees for late payments. Plus, each of these late charges is capped at 25 percent of the original purchase price. On the flip side, responsible users are rewarded by being able to take on more payment plans at once.

How Afterpay works

When you shop at an eligible online retailer and select Afterpay as your payment option, you’ll pay 25 percent of the purchase price when you check out. The remaining cost is split into three additional payments (for four total equal transactions) over the course of six weeks – with two weeks in between each payment. Unfortunately, that is the only financing schedule currently available with the service. You won’t be able to change your payment amounts or schedule.

The easiest way to use Afterpay is to download the mobile app (or you can just log in online), where you can easily keep track of any payment plans you currently have and your billing information. You simply link a debit or credit card to your account and set up automatic charges.

If you miss a payment, you’ll be charged a late fee of $8 to start. If the payment is more than seven days late, you can be charged an additional $8 fee. Fortunately, late fees will never exceed 25 percent of the original purchase price. On the downside, your account will be frozen, and you won’t be able to make an Afterpay purchase until you pay what is due.

Overall, choosing Afterpay is much easier on your credit score. Signing up for the service doesn’t require a hard pull on your credit like a loan or credit card application, and you can freeze your account at any time to prevent new purchases from being made. If you decide that you want to pay off a balance early, you can do so in each installment amount.

Pros and cons of paying with Afterpay

While Afterpay can be a great resource for users who need to split up purchases into smaller amounts, it does come with a few drawbacks. Here are some of the pros and cons of using the service:


  • Since Afterpay is not tied to your credit, late payments won’t hurt your credit score.
  • You can pay off a purchase over time without incurring interest.
  • You don’t have a credit limit to worry about.


  • Payment plans are limited to one structure – four equal payments over six weeks.
  • Not all retailers accept the payment method.
  • Returns can be complicated.
  • You can’t link an American Express card to Afterpay, only a Visa or Mastercard.
  • You can’t use Afterpay to build your credit history.

Tips for maximizing Afterpay

If Afterpay is still the best payment choice for you, follow a few simple tips to ensure you get the most out of the product.

Use a rewards card as your primary payment method

Opting for an alternative payment plan rather than charging a purchase to your credit card and carrying a balance to pay it off over time does not mean you have to sacrifice rewards. By using a rewards card as your primary payment method on Afterpay, you still get rewards for the full purchase amount, but you can pay it off in more manageable pieces without racking up interest.

Always make installment payments on time

If you miss a payment, your Afterpay account will be frozen, and you can no longer take advantage of the service. Though late fees are limited, you could also end up with some unexpected charges.

Don’t take on too much at once

While it is unlikely Afterpay will approve you for more installment plans than it thinks you can afford, you should also carefully consider your own budget when making a new Afterpay purchase. You don’t want to be stuck with more than you can pay off.

Keep track of your plans

In the Afterpay app, you can view any current payment plans and set up payment reminders for each due date. It is also a good idea to add due dates and their amounts to your personal calendar to better visualize your budget.

Other installment plan services

In addition to issuer-offered installment plans like American Express “Pay it Plan it”, several other apps include similar benefits to Afterpay. Each has their own financing options and fees, so be sure to research them carefully before choosing that payment option.


  • Pay over three, six or 12 months (up to 39 months at select stores).
  • APR range: 0 percent to 30 percent, based on credit check.
  • Down payment may be required for some users.
  • No late fees or loan limit, but your loan might be limited based on credit history.


  • Pay in four equal installments, spread over six weeks.
  • Zero interest and no fees when you pay on time.
  • 25 percent of the balance is due at the time of purchase.


  • Pay in four equal installments (spread over six weeks), 30 days after purchase or select from three to six month financing plans.
  • No interest or fees for installment or 30-day plans. Competitive interest rates for financing plans.
  • App allows users to pay in installments with any online retailer.

Final thoughts

Afterpay can be a great, no-interest alternative to financing a purchase with a credit card. Plus, you can use your credit card as your payment method to rack up rewards. Just be sure not to let the small payments fool you into taking on more than you can pay off.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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