Should you buy things using Afterpay Touch Group Ltd (ASX: APT)?
Afterpay management would definitely say yes!
If you buy an item or service through Afterpay then the payments are split into four simple automated payments, every two weeks.
Sounds pretty good right?
If you pay every instalment on time then the customer doesn't pay any charges or fees. It's an essentially free service for the customer.
You can walk through any Scentre Group (ASX: SCG) and you might see more than a third of fashion stores now offering Afterpay as an option.
It's quite amazing to see how much the shopping centre experience can be altered after decades of using the same systems.
Not considering the investment side of things, is Afterpay actually improving things for customers?
In a lot of ways it might replace usage of a credit card, although Afterpay does generate late fees from customers who don't pay on time, whilst also getting a margin from retailers such as Wesfarmers Ltd's (ASX: WES) Officeworks.
As a warning to potential first home buyers, banks like Commonwealth Bank of Australia (ASX: CBA) might somewhat negatively affect a loan/mortgage application.
However, if getting a loan isn't a concern then it's worth considering if Afterpay is right for you. It might improve your cashflow, which could be helpful for some people, but will you end up spending as much as if you didn't have Afterpay?
There is a danger that having the flexibility and optionality of Afterpay means that you end up buying more items or services that you may not have otherwise not purchased.
It is possible to actually be better off whilst paying with Afterpay. You could transfer the amount you owe to a savings account and earn interest until you have paid off the total.
In my view, what's wrong with saving during that time, instead of paying through Afterpay?
Whether you use Afterpay or not, I think it's important that you budget so you can stick to a certain amount of discretionary spending.
