Is the Afterpay payment method good for your wallet?

People are calling this new layaway system “sexy” – but is it really all that?

The old-fashioned layaway purchase got a makeover, and it’s attracting millennials like moths to designer flames. A recent Glamour article details the impact of Afterpay, a layaway system that’s a departure from old department store installment programs.

In the past, layaway meant making periodic payments and receiving the item you were pining over only when the last payment went through. Afterpay is different. You get your prize immediately. This model is extra attractive to a generation that’s used to immediate gratification. There’s no waiting. You just sign up, make your first payment, and get what you desire. It sounds great, but there are multiple ways this process can go wrong.

Unsurprisingly, young Millennial women can’t afford a lot of high-end beauty products or fashion items. Because they were raised during the recession, many of them also have a fear of credit cards. They don’t trust themselves not to treat it like free money. Additionally, they already have too much student debt. Why take the chance of adding more with a credit card? In fact, Millennials use debit cards to pay more than any other generation.

How does Afterpay work?

So, how do services like Afterpay change things for fashion-forward but frugal Millennials? Unlike credit cards, Afterpay doesn’t charge interest. They have a system of late fees in which you get charged $8 if you miss an installment. This sounds small compared to high credit card interest rates, but these fees can add up.

The biggest danger with rent-to-own programs like this is that people start to buy things they can’t afford. The periodic payment price tag makes it feel like they’re getting a special deal. The marketing psychology behind this process is actually pretty genius because even Afterpay users are aware that they likely couldn’t pay for any of these things upfront. They consciously choose to overlook that because Afterpay finally gives them a way to “afford” the luxuries they want.

Not only does this create budget problems down the road, but it also cements bad spending habits. It’s difficult to stop buying things you can’t afford once you start. With monthly payments for new shoes and makeup palettes added on to high rent, car payments, grocery bills, etc., an Afterpay user’s ability to save for emergencies can dry up. This can end up being worse for your credit and increase your debt if you are hit with an emergency expense that you have no choice but to charge.

using afterpay to make purchases

Why people use Afterpay

As a young Millennial woman interested in fashion myself, I’m extremely wary of this payment process. It’s so much easier to write off bi-weekly payments as “affordable” because you are no longer thinking to yourself, “can I afford $700 shoes this year?” You’re thinking, “can I afford $50 extra dollars per month for a while?”

The periodic $50 will always look better than the $700, even if in the end, you’re paying the same price. Paying with a credit card is different because you have to stare down that $700 price tag before you check out. As long as you keep in mind that you will have to pay interest on that payment later if you spread it out, it’s a much more realistic way to shop for high-priced goods.

Alternative ways to update your wardrobe

If I’ve sufficiently dissuaded you from using these new payment systems, don’t worry. There are still ways to get the items you want. Here are some rules I live by to get the fashion and beauty products I want at a price that doesn’t make my wallet cry:

Luxury Consignment Apps and Stores

You could pay $1500 in small installments to get that new designer handbag…or you could find it at a designer consignment shop for a quarter of the price. Online shops like LePrix and The RealReal let you buy previously owned designer gear at a much more realistic price. Don’t get me wrong, it will still be expensive. But paying $500 up front is much different than paying $1500 over time.

Second-Hand Apps

Mobile apps like Poshmark and thredUP are less centered on luxury items (though they do have some) and focus more on allowing users to sell their clothes at low prices. Mid-range brands like Madewell and Free People are all over these apps, and you can pick up some items for less than $10.

DIY Fashion

Don’t be afraid of sewing machines – they can be your saving grace when it comes to saving money on clothes. If you see a high-end item you really like, you could be able to DIY something similar. Are Peter Pan collars making a comeback? Thrift an old men’s button-up shirt and transform it. Really need a statement necklace to brighten up your wardrobe? YouTube has more jewelry-making tutorials than I can count. You’re creative and capable, so embrace it and save some money while you’re at it. If you need some inspiration, take a look at YouTuber Annika Victoria’s “Make Thrift Buy” series in which users challenge her to recreate trendy fashions herself. The best part about this method? No one will ever have the same piece.

Makeup Dupes

If you haven’t heard this term before, a makeup “dupe” (short for duplicate) is a cheaper product that can hold its own against a luxury competitor. For example, this Buzzfeed list claims that the $11.99 Revlon PhotoReady Insta-Fix stick foundation can stand in for the $40+ Bobbi Brown foundation stick. Google basically any makeup product name followed by the word “dupe” and you will find a cheaper way to pull off that trendy makeup look.