Afterpay explained: how the 'buy now pay later' service works

Shopping cart beside the words 'Buy Now Pay Later' for Afterpay
(Image credit: Getty Images/ Nora Carol Photography)

What is Afterpay?

Afterpay is a buy now, pay later service that allows you to make purchases at supporting retailers and pay for your purchase with four equal instalments over a 6 week period without paying interest.  

Interested in opening an Afterpay account? Here’s everything you need to know before signing up.  

Who can use Afterpay?

Anyone over the age of 18 can set up an account with Afterpay. 

How do you make a purchase with Afterpay? 

Once you sign up for Afterpay, you have to link a debit or credit card which will be used to pay for any purchases.  

When shopping online, if the retailer supports Afterpay, all you have to do is select the “Afterpay” option at the checkout and login to your account. The first instalment will be deducted from your nominated card, and your purchase will be shipped to you as normal. 

When shopping in store, you can use the Afterpay app to set up an Afterpay Card, which can then be used from your phone’s digital wallet to pay for purchases. 

How do repayments work?

When you make a purchase with Afterpay, your nominated credit or debit card will immediately be charged 25% of the total purchase price.  

You will then be charged another 25% every 2 weeks for the next 6 weeks until you’ve paid off the total amount. 

You can also choose to pay a custom amount or pay off your remaining balance at any time through the Afterpay app. 

What is the maximum you can spend?

When you first sign up, your Afterpay spending limit will be capped at about $600. Your spending limit is tailored to your history with Afterpay, so if you prove you can make repayments on time, your spending limit will gradually increase. The maximum limit you can reach is $3,000.  

Are there any penalties for late payments?

If you’re unable to make a repayment, you’ll be charged a late fee. However if you contact Afterpay ahead of time, you may be able to reschedule the repayment or make a partial repayment.

Can using Afterpay damage your credit score?

According to Afterpay, they do not do credit checks or report late payments which means that your credit score should not be impacted by using Afterpay, even if you fail to make a payment on time.  

Which retailers use Afterpay

Many major retailers support Afterpay payments. Here is a list of some of the big Australian stores with Afterpay

For the full list of retailers, visit the Afterpay website.  

Should you just get a credit card instead?  

While the benefits of using Afterpay are similar to the benefits of having a credit card, there are also some key differences.  Here’s a quick rundown of the important ones to help you make an informed decision about which option is best for you.  

Credit checks:

Afterpay – there are no income or credit checks when you sign up. 

Credit card - when you apply for a credit card, the bank will do a credit and income check before approving you. 


Afterpay – Afterpay is a fee-free service which means that there are no opening fees or account fees. The only time you may be charged a fee is if you fail to make a payment on time.

Credit card – While some credit cards are fee free, a lot of credit cards (especially rewards credit cards) have annual fees.

Credit limit:

Afterpay – When you sign up for Afterpay, your spending limit will only be $600 but this can be increased by making regular repayments on time. The maximum limit you can reach is $3,000. 

Credit card – On a credit card, your maximum credit limit will be determined by the bank. This will depend on your credit score as well as your income. If you have a high income and good credit score, you will be eligible for a much higher credit limit, although you can usually request a lower limit, if desired


Afterpay – Afterpay does not have a rewards program, so you will not earn points or rewards for using it. However, if you sign up for an individual company’s rewards program (such as Myer One) and shop with them using Afterpay, you can still earn rewards points from these third-party programs. 

Credit card – Many credit cards offer rewards, such as Frequent Flyer Points or Velocity Points. Each credit card points system is different, but these points can usually be used to save on flights, groceries or to buy gift cards or other items from a rewards product catalogue. 


Aferpay – Afterpay does not charge interest on your balance, however you will be charged a late fee if you do not make a repayment on time. 

Credit card – Depending on the credit card, there will be an interest free period for you to pay off your balance without being charged interest. If you don’t pay off your balance before this time, you’ll be charged interest on the outstanding amount. The amount of interest charged will depend on the interest rate of the credit card. 

Will it affect your credit score?

Afterpay – While paying off your Afterpay balance will not improve your credit score, using Afterpay will not negatively affect your score either. This is because Afterpay does not perform credit checks or report late payments. 

Credit card – If you are responsible with your credit card and continually pay it off on time, your credit score will improve. However, if you fail to pay off your balance, your credit score will be negatively affected, which may affect your ability to access other financial services, such as loans, in the future. 

Where these payment methods can be used:

Afterpay – You can use Afterpay to pay for purchases both online and in store at supporting retailers. While there’s a long list of retailers that allow Afterpay, there are still many outlets that do not. 

Credit card – You can generally use a credit card to pay online or in store at any company that accepts card payments. The one notable exception to this are American Express credit cards, which is not accepted by certain Australian outlets. 

Amelia Hetherington
Ecommerce Editor

Amelia is an Ecommerce Editor at Getprice who specialises in hunting down great bargains and useful discount codes across a wide variety of products and retailers, curating gift guides for all occasions, and doing the maths to calculate the top-value mobile and internet plans for a variety of needs. Her goal is to help make finding the best online discounts as easy as possible. She loves writing about major deals and sales events to help you get the most bang for you buck at sales time.