AfterPay – How it impacts your financial picture.

Something to always consider is what kind of picture your bank statements are painting.


If you had to show someone your bank statements would they clearly see that you are working hard towards a financial goal? Or will they show that you always like to live in the moment and live payday to payday??


There are two reasons why this is a good way to think about your bank statements:


  1. If your bank statements are painting a picture of achieving your financial goals that brings so many benefits to your life!
  2. If you need to borrow money, then you want your bank statements to show a picture of someone who is responsible with their money and comfortably able to repay the money you are wanting to borrow.


AfterPay does not paint a good picture in your bank statements!


Below are some of the downsides of having and using an AfterPay account.


You spend more than you should or more than you can afford


Because the payments come out on small instalments, its easy to spend more than you normally would. You look at the purchase as 6 payments of only $20 rather than $120.

Maybe you can afford the $20 – but you cannot afford the $120. This is easily fixed by changing your mindset. Have a simple approach to buying anything – If I cannot afford to pay for it in full then I will not buy it. From there you can either not purchase or start saving up and buy it when you can afford to.


The payments can get away on you


Because they are often charged in small amounts, these small amounts can add up really quickly if you are buying several items. This can leave you feeling very short on funds when you see a huge list of deductions taken from your bank account. Remember small amounts add up really quickly. This can be used to your advantage too – small amounts into your savings account when untouched can add up to a nice balance over time.

AfterPay will likely negatively impact your borrowing capacity


Using AfterPay shows a bank or a lender that you do not have good control over your money because you are relying on this service to get you through. It also shows that you do not have the discipline to wait and pay for something in full. These traits do not mix well with lending you money because it means you might prioritise these same purchases over paying back your loan.


The other thing to consider is that AfterPay assigns you a limit on your purchases. E.g it might be $3000. So while its not a credit card and you  may not currently owe anything on your AfterPay account, the bank will still consider it a $3000 debt. This will reduce your capability of lending.


High Late Payment fees


AfterPays late payment fees are very high and if you miss a payment it impacts your ability to continue using this service. This can mean you are getting charged even more by missing a payment, or it may mean that you prioritise paying your AfterPay over something else that might be much more valuable in your life. E.g bills, rent, mortgages.


As far as I am concerned there is no positives to AfterPay. You can still purchase anything you like without using the service – you just need to have the money available then and there.


Cancelling your AfterPay account will be a fantastic step to a better financial future!


If you have not read our first blog post on AfterPay – you can read it here