Reading Time: 3 Minutes
What’s up Frugal Samuraites!
Ab-so-loot-ly freezing my proverbial cheeks off here in Auld Sydney town.
Maybe something about not wearing pants according to MrsFrugalSamurai.
Shorts and long socks aren’t attractive apparently, ha! The nerve of that woman.
I actually think it’s to do with these Antarctic winds coming over for a visit Brrrr.
That’s partly why MrsFrugalSamurai and I found ourselves in the warm embrace of friendship at our friend Bess’s place last night.
A riproaring dinner as always (thank you Bess!) and of course the conversation was as free flowing as the meal (beef hotpot with traditional oriental sides).
Unfortunately for yours truly, I missed most of the conversation as I was pre-occupied engorging on the delectables on offer. I have a voracious appetite, a blessing and a curse you see.
However I did catch one tidbit as I was eyeing off a particularly juicy piece of dumpling coming to the boil.
“So who’s used Afterpay?”
“Same here, it’s great!”
I was momentarily stunned… how long do dumplings take to boil? Should I have gone with a beef-ball instead?
That, and also the fact that so many people around the table had used what I thought was something comparatively new to market.
Hm, wassat? Dumplings? No thank you, I prefer beefbal… oh what? Afterpay? Ah right of course, Afterpay.
Essentially, as the name suggests – Afterpay is a platform which allows you to pay for a purchase over four instalments, kinda like a digital lay-by system.
For example, say you wanted to buy some… gee I dunno, some dumplings which boil quickly for $100.
Those are some damn expensive dumplings may be your first thought, which would quickly be dissipated when you realize that you can break-down this purchase over 4 payments of $25 each (6-8 weeks in total).
Still some expensive dumplings no doubt, but worth it when you realize how quickly they boil.
And here’s the rub, if you pay those four installments of $25 on time, there’s no additional fees or charges. Zilch, nada, none.
Amazing concept right!
Sure is! What’s the catch?
Well, if you don’t pay those installments on time, you’ll be charged late fees (capped), and in the fine print – Afterpay does reserve the right to perform credit checks, and to report any negative activity on your credit record.
So the catch really is to make sure you have good financial accountability and pay your bills.
As long as you pay off your installments on time, stick to your spending budget and don’t get ahead of yourself – you should be fine.
I know, I will, so how does it work?
From what I’ve gathered, Afterpay starts you off with a default credit limit, say $500 which you then go ahead and spend by placing 1st installment payments over thinly sliced beef, dumplings, fishcake tofu and beefballs – in that order.
As you steadily pay them off over the 8 weeks, Afterpay realizes that you’re about to have beef hotpot, as well as possessing a great repayment history – and hence increase your limit steadily, thereby allowing you to purchase more items – say chicken giblets, maybe some lotus root, even a mushroom or three.
I know, and what’s more – imagine if you could not just use it to buy dumplings, but a whole range of household items.
In fact, look at all the retailers which offer it currently: Myer, Target, Officeworks, Asos, Bobbi Brown, Ugg etc. etc. with plenty more to come I’m sure.
What’s more exciting would be if you can use it on everything.
Think healthcare bills, basic groceries, petrol, airfares, hunchbacked hitmen, heck – even paying taxes!
Wouldn’t our government love it if they can’t get their greedy hands on our hard earned at their earliest convenience?
Have you used it TheFrugalSamurai?
Admittedly no, and not because I don’t want to – I think it’s a brilliant concept of cash flow management.
You see, a dollar today is worth more than a dollar tomorrow.
By paying down 25% first, leaves 75% of the remaining funds for me to do as I wish – say to buy some more beef-balls or maybe just invest it. Strewth, even leaving it in the bank account will see it earn interest!
However, the primary reason which I don’t use it is because the lenders don’t like it.
They view Afterpay users as ones whom have irresponsible spending behaviour, i.e. can’t afford to pay off the purchase in one go – and inevitably represent a higher credit risk which impacts any loan applications.
Real estate being a cornerstone of my investment philosophy, I need them on my side…
…BUT as soon as it’s widely accepted, faster than you can say “hey, I think that dumpling is boi…”, I’ll be on it in a flash.
Although, I have to share a secret, the secret ingredient to my beef noodle soup… there is no secret ingredient! Don’t have to, to make something special, you just believe it’s special!
Um sorry, I think there was a point to be made there, what of I’m not so sure anymore. It just felt so right to include it y’know?
Yes, ahem, so the secret.
Um the secret is that I invested a little bit in Afterpay shares:
I’m out of it now, because I think the market is too lucrative for big players to not make a move (VISA is looking to muscle in).
Still, I think that this proves the old adage of investing in something that provides solutions, as well as changing the habits and behaviour of peoples’ lives is the way to go.
After all, I’m sure more and more companies are going to be tailoring their products and services for the younger generations of millennials and beyond.
Oh and btw, MrsFrugalSamurai has used it, the sneaky fox – she never told me until yesterday, claims she “didn’t know” she was using it.
FAT CHANCE MISSY, we all know you have too much make-up.
But then again what does she know, she wants me to wear pants.
Oh and if you’ll excuse me, I think the dumplings’ come to boil. FINALLY.
What do you think? Did you enjoy this post? Please help me out if you enjoyed this and put your email in and click on the little “subscribe” button at the top right. This way, you’ll never miss my words of awesomeness! So do the right thing, be a subscriber and get it straight to your inbox fresh out of the oven!
P.S. Sigh, I wish I signed up as an affiliate before I posted this, just a pauper I am…
Kari | Money for the Mamas
This is interesting. Do they run a hard credit check on you? Do they then report to the 3 credit bureaus? I like the idea, yet I have a feeling people may get over their head with it. I wonder how long you can go without paying installments before they cut you off? Or do they have your cc on back up and just start charging your balance + fees? Lots to think about, I will have to check them out!
The Frugal Samurai
They only run a credit check when things go bad… in which case it’s a credit hit on your file. And you are SO right, (also what they’re counting on for revenues), that is – for people to now buy things for “stuff”, paying later is tomorrow’s problem! Please do, I’m still checking them out myself haha, thank you for reading though!