How does Afterpay work?

Afterpay allows you to pay for goods with installment plans spread out over four payments every two weeks. Like other buy now, pay later fintech companies, they offer a large online directory of affiliated retailers.

To use the service you must meet the following qualifications:¹

  • 18 years of age
  • A resident of the US and reside within the 50 states or District of Columbia
  • Capable of entering into a legally binding contract
  • Have a valid email address and mobile phone number
  • Authorized to use a US-based debit or credit card—Visa, Mastercard or AMEX

If you meet those qualifications, you can download the application on your smartphone and sign up. From there, you’ll be able to shop online and choose Afterpay as your method of payment at checkout or download a virtual card that you can use in-store.

You’ll make the first payment immediately and the rest of the payments in equal installments every two weeks. The item will ship as though you paid for the full purchase right then, so it isn’t like a layaway.

The application will take the money from your linked credit or debit card automatically on the due dates or you can pay early if you have the funds. And Afterpay charges no interest on the payments.

Is there a credit limit with Afterpay?

Yes, there is a credit limit with Afterpay. To see your limit, open the app and tap ‘Orders’ at the bottom of the screen. It will display a pre-approved amount underneath the total amount you owe.

However, just because you have a pre-approved balance available doesn’t mean you’ll be approved for every purchase. Like other buy now, pay later services, Afterpay has an automated system they use to approve payment plans at the time of purchase. And they do not share this information with the public.

The company states that they “consider a number of different factors” and look at things like:²

  • Availability of funds on your Afterpay virtual card.
  • The amount of time you’ve been using the service.
  • The current amount you need to repay.
  • The total value of your order.
  • The total number of orders you have open.