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How does post-payment work? What do you want to know

Large purchases can be a brutal blow to your wallet. What if you could split a single purchase into multiple smaller payments? With Afterpay, you can shop in-store or online from partner retailers, splitting large purchases into smaller, interest-free payments.

We’re going to explore Afterpay, one of the many buy now, pay later services, and see if it might be right for you. Budgeting for a major purchase is usually the best advice, but sometimes you need to make an immediate purchase, and Afterpay could be the answer.

But is Afterpay as good as it looks, or is it too good to be true?

What is Afterpay?

Afterpay is a buy now, pay later service. An alternative to credit cards and personal loans, Afterpay lets you make purchases and pay them back over time. If you have a large purchase, Afterpay can probably break it up into smaller, more manageable payments.

You can shop online or at supported stores. Some Afterpay partners in store include PetSmart, Bed Bath & Beyond, Sephora, Urban Outfitters, DSW and Nordstrom Rack. Check the Afterpay website to find supported retailers near you.

If you shop online, you can shop with partner retailers by clicking the Buy Now, Pay Later option at checkout.

How does post-payment work?

Afterpay facilitates the purchase process. We recommend that you start your purchase with download Afterpay app. The app will let you see your approved purchase limit and purchase discounts.

Download the Afterpay app

Once downloaded, launch the app and begin the registration process by visiting the My Afterpay tab at the bottom of the screen. From there, click on the Create Account button. You will need to provide personal information to complete the process.

Once registered, you can navigate to the My Afterpay tab to view your pre-approved spending limit. You can view current shopping promotions by visiting the Shop tab or by keeping an eye on accumulated reward points under the Rewards tab.

Unlike some of our favorite services, Afterpay limits your purchases to approved business partners. You can discover supported stores and websites by visiting the Store tab. You can search for your favorite retailers using the search bar.

Shopping with Afterpay

When you’re ready to buy, we recommend using the Afterpay app. You can directly visit some retailers’ websites to shop, but not all stores support shopping outside the Afterpay app.

At checkout, select the Buy Now, Pay Later button to complete the purchase with Afterpay as the payment method. You may need to verify your account information and add a bank account or debit card.

Afterpay will have no effect on your credit score or your report to the credit bureaus. Also, no minimum credit score is required.

If you’re making in-store purchases from a supported retailer, you’ll need to generate a virtual credit card by visiting the In-Store tab in the Afterpay app. Start by tapping the Set up Afterpay card button and follow the instructions.

You can then use the virtual card via Pay Apple Where Google Pay to make your purchase in store.

Financing and fees after payment

Purchases after payment are divided into four payments, payable every two weeks. At checkout, you will be responsible for the first payment (consider this the deposit).

From the initial payment date, installment payments will be due into your Afterpay account every two weeks for the next six weeks.

There are no service fees to use Afterpay and purchases are funded interest-free. The only charges we might discover with Afterpay are late fees if you miss a scheduled payment. In the United States, late fees are capped at 25% of the order value.

Once you miss the installment payments, Afterpay will stop approving purchases to save you from further debt. Additionally, Afterpay can prevent people from overbuying by declining purchases. You can defer Afterpay payments if needed.

Alternatives to Afterpay

We recommend Afterpay to buyers who want to break a large purchase down into smaller, more manageable payments. However, it may not be the right choice for everyone as it is not available at all retailers. Here are some other services you might consider.

Other services Buy now, pay later

Afterpay isn’t the only buy now, pay later service available as a shopping partner. Different options have emerged to offer a short-term, interest-free payment method. These options include To affirm, KlarnaPayPal, Zip and Sezzle.

Here’s how Afterpay compares to some of the more popular options:

Buy Now, Pay Later Service Comparison



To affirm


Payment schedule

First of 4 payments immediately, then every 2 weeks

Affirm Pay in 4 (every 2 weeks) or Monthly Funding

Pay in 4, Pay in 30 days & Monthly financing

Interest rate

0% interest

0% on Affirm Pay in 4; 0% to 30% per month

0% for Pay in 4 and Pay in 30 Days; 0% to 25% per month

Late fee

$10, followed by $7 if payment is not made

No late fees

Up to $7 on Pay in 4; up to $35 per month

Effect of credit score

No credit check

Flexible credit check; can report history to Experian

Flexible credit check for Pay in 4 and Pay in 30

where it is accepted

Select online and in-store retailers

Anywhere online and in-store with wireless payment

Everywhere online and select in-store retailers

Other Postpay Alternatives

If a “Buy Now, Pay Later” service isn’t the best choice for your particular purchase, you might want to consider a more traditional option. Personal loans allow you to borrow money while building a credit history as they report to the credit bureaus.

The downside to personal loans is that they are rarely interest free, but you may be able to finance larger purchases.

Discover our guide to the best personal loans to learn more about the best institutions to consider when taking out a loan.

Another option for large purchases is a zero rate credit card. To learn more about this type of credit card, we recommend that you consult The Penny Hoarder Academy: Credit Cards 101. You can also discover the best cash-back credit cards to earn money with every purchase.

The pros and cons of Afterpay

There are several advantages and disadvantages to Afterpay. Here are some of the biggest.


  • Interest-free loans are available for purchases, splitting a large load into several smaller payments at no additional cost.

  • The ability to defer loan repayment dates to better suit your personal financial and billing needs.

  • The mobile app offers reward points and special offers for shoppers, saving you extra money on future purchases.

The inconvenients

  • Total Afterpay purchases are limited to a maximum of $2,000.

  • Afterpay is only accepted at participating outlets and online websites, making it a more limited option than competitors.

  • Late fees, up to 25%, are charged if you miss a payment date.

Frequently Asked Questions (FAQ)

Does Afterpay affect credit?

No, using Afterpay will not affect your credit. Afterpay does not affect your credit score or credit rating because the company does not report late payments. Afterpay will also not perform credit checks with credit bureaus when you sign up.

How much does Afterpay cost?

Afterpay is a free service. The only fees we’ve found associated with Afterpay are late fees. If you miss your scheduled payment date, you could be liable for late fees of up to 25% of the loan amount. Afterpay does not charge interest.

What is the maximum limit for Afterpay?

The maximum limit for each person using Afterpay may be different. The maximum approval limit anyone can receive on Afterpay is $2,000.

Can I use Afterpay for gas (or to pay my bills)?

Afterpay can only be used with partner retailers across the United States. For a complete list of approved retailers, visit Post-payment website.

Michael Archambault is a senior technology writer for The Penny Hoarder.

This was originally posted on The Penny Hoarder, which helps millions of readers around the world earn and save money by sharing unique job opportunities, personal stories, giveaways and more. The Inc. 5000 ranked The Penny Hoarder as the fastest growing private media company in the United States in 2017.