Business Daily Media

Business Marketing

.

Should you be using Afterpay?

  • Written by Gerry Incollingo the MD of LCI Partners

In NSW, Monday 11 October, the first day out of lockdown for the double-vaxxed only, data from NAB’s merchant terminals reported that $12.8 million was spent by Sydneysiders within 24 hours in pubs, bars and restaurants while $100 million was spent on retail. Monday was also a working day so the weekend figures will likely skyrocket.

However, according to Suncorps annual spending report, 1 in 5 Aussies are not great at saving money, and spending habits have been lacking since the beginning of the pandemic, with thousands of Aussies opting for impulse purchases over working towards a steady savings scheme. 

As we can see from the spending habits on Monday, it is likely that some Sydneysiders may find themselves in financial trouble if they are not careful.

Which brings us to concepts, such as, Afterpay.

Afterpay is a relatively new payment concept that means we no longer have to “lay-by” items that we can’t afford. Instead, you can pay with Afterpay who will front the money for your purchase, and you will then pay them back in 4 installments. If you have been watching the stock market over the past 18 months, you will see that it is an extremely popular concept.

However is it a positive service for Australians to be using?

The pros of Afterpay are:

  • * Afterpay does not charge interest like credit cards do, so if you are good at paying back your bills, it may be a better option than Visa or MasterCard
  • * More businesses are accepting it, both online and in-store
  • * The approval process is a lot easier than getting a bank loan, it is pretty quick in fact
  • * Afterpay splits your payments into 4 installments which are to be paid fortnightly

The cons of Afterpay

  • * Afterpay encourages impulse buying. Back in the days of putting items on “lay by” you could really think about whether you needed the item or not. It saved Aussies a tonne of money as it was harder to make an impulse purchase
  • * While they don’t charge interest, they do charge late payment fees
  • * You need to pay when they want you to pay, you can’t choose the payment terms
  • * It’s rarely positive to spend money you don’t have unless you are investing

My final thoughts are that if you are good at paying back your credits, then it could be a more positive payment method than a credit card. However, tightening your spending for a few months in order to have savings is always the best option. Having an emergency fund, an operations fund and a entertainment budget is a far better option than getting yourself in debt over an impulse purchase.

Gerry Incollingo is the MD of LCI Partners, a firm that specialises in accounting advisory, lending, wealth, property, insurance and legal

Popular

Optus | Commentary on governance, policy and procedure - Rackspace Technology

“This incident is all about governance, policy and procedure. You can have the best security solutions in place, but you are vulnerable to breaches without the right policies and procedures overlaid with effective governance.   ...

PawsEco: The first ever virtual marketplace for pet store owners

Pet industry expert, Rio Afero, launches the first virtual e-commerce platform designed to support pet store expansion, as pet-ownership soars in Australia to over 61%   The COVID-19 pandemic has had a huge impact on the...

Tecala Acquires rapidMATION To Scale Capabilities in Automation and AI Solutions

Leading technology service provider Tecala Group today announced the acquisition of market leading intelligent automation group, rapidMATION. The investment comes off the back of a capital raise concluded in 2022 to fuel the gr...