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Affirm vs Afterpay: Which Is Right for You?

By Kyle Kapper

Updated Sep 29, 2023

Affirm vs Afterpay

    When you’re ready to make a consumer level purchase, you have a few options: You can pay cash, you could use a credit card, or you might choose to use a buy now pay later service. While there are pros and cons to each of these payment methods, we’re going to focus on the last of the three, buy now pay later services. Two popular companies offering this type of service are Affirm and Afterpay. Let’s discuss which is right for you.

    An Overview of Buy Now Pay Later Services

    Simply put, buy now pay later, or BNPL, is exactly what the name implies: You can make a purchase now and pay it off later. While this is possible with a charge card, many people are trying to avoid credit card debt. Additionally, when you have a credit card, you often have an annual fee as well as a potentially high interest rate.

    There are a few things to keep in mind. While BNPL might not charge high interest rates and usually doesn’t include any fees, they do often require automatic payments. You will know your payments amounts up front, and you’ll know when the entire purchase has been paid off. BNPL can affect your score with the major credit bureaus, just like a credit card can.

    Comparing Affirm and Afterpay

    Two popular companies to consider for a BNPL loan are Affirm and Afterpay. We’ll look at some of the specifics for each of these companies to help you decide if one is better than the other for your particular circumstances.

    How Affirm Loans Work

    Affirm lets you enjoy shopping online stores with a pre-set credit limit. You can shop in your favorite online stores, and the app allows you to see how much you’ll pay over various periods of time.

    How to Get Started

    1. To use Affirm, you’ll first download the app.

    2. Create an account with very basic information. It will base your credit limit on your self-reported salary; the app won’t ask for your social security number.

    3. Choose where you want to shop and whether you’d like an Affirm credit card or if you’d like to just use the app.

    4. For in-person shopping, you can use the app to pay for your purchases while you’re in the store.

    5. For online shopping, simply choose the store you want and click “shop online.” Once you fill your cart, select Affirm at the checkout, pick your payment plan (you’ll have several options), and complete your purchase.

    Costs and Fees Involved

    Affirm doesn’t have an annual fee, and it offers payment options with and without interest. The options available will be different for everyone; yours will depend on your credit score, purchase price, and whether you sign up for a payment plan before or after your purchase. There are no late fees, and they don’t charge any early payment fees.

    Financial Flexibility Allowed

    Affirm offers quite a few options. You can choose to pay off your purchase over a period of weeks or months, depending on what’s available to you. You may have options to pay it off over a longer period of time while paying a moderate interest rate or to pay for it more quickly on an interest-free basis.

    In addition, you can request a credit card, which links to your checking account. You can use this card in brick-and-mortar stores, and you can still request to make payments through the app.

    Customer Service Available

    If you’re using the website for customer service, you can simply go to the Help Center and see a list of frequently asked questions. There’s also an Affirm digital assistant ready to answer questions anytime. If you need a more human response, you can go to Contact Us and reach a person to help.

    Choosing “Help” in the Accounts section of the app will bring you to the website, where you’ll have the options above.

    How Afterpay Loans Works

    Afterpay offers interest free payments through their easy-to-use app. You can choose from thousands of brands, and you can use it in-store as well as online.

    How to Get Started

    1. Download the Afterpay app.

    2. Create a free account. Once you enter basic information (they don’t ask for your social security number), you’ll receive your spending limit.

    3. Go to their online shopping page and choose which store you’d like to make a purchase from.

    4. You can also use the app in-store. Just choose that option on the app, find participating stores, and use the app linked with your Apple Wallet or Google Wallet app to complete your purchases.

    Costs and Fees Involved

    When you pay for your items making four equal payments over six weeks, you won’t pay any fees or interest at all. You won’t pay fees if you make on time payments. There are late payment fees of up to $8.

    Financial Flexibility Allowed

    You have the flexibility to use your app to make purchases online, or you can use it for in person purchases. You can also track payments and reschedule your payment dates to keep control over your budget. In addition, partial payments are allowed.

    Customer Service Available

    On the website, there’s a Help Centre, where you can choose from a variety of options, such as “I need help with a refund/return,” “I would like to close my account,” and “Help With Payments or Hardship Support.” As long as you’re logged in, you’ll be able to send a message for the staff to return.

    On the app, you can go to your account and click Help. From there, you’ll have similar options as to what’s on the website, or you can click the pen and paper icon and start a conversation for more personalized assistance.

    Which Service Offers What You Need?

    When comparing Affirm vs Afterpay, you’ll see that they’re similar. There are more options for paying off your purchase with Affirm, but some of those options charge interest. There are no late fees with Affirm. Afterpay will send you reminders of upcoming payments to help you avoid late fees, but they do charge them if you’re late.

    Both will allow you to shop online and in person, and both will provide you with another payment method outside of using a high-interest credit card or cash to make the purchases you want now.

    Comparing Affirm vs Afterpay At a Glance

    Check out some of the similarities and differences between Affirm and Afterpay:

    Late FeesNoYes
    InterestWith Some Payment PlansNo
    Payment Options AvailableVariesJust One
    In-person Shopping AvailableYesYes
    Reports to Credit BureausSometimesNo

    The Basics of How Credit Bureaus Work

    When it comes to credit bureaus, it’s important to understand how they work to help you make the choices that will boost your financial power now and in the future.

    Understanding a Soft Credit Check

    Note that Affirm and Afterpay both use a soft credit check to determine whether your credit history and payment history are adequate for credit with them. A soft credit check means it won’t show up on your credit report and won’t impact other credit that you apply for.

    You’ll generally know if a credit pull is a hard or soft credit inquiry based on the information it asks for. If it requires your social security number, it will often be a hard credit inquiry. If it only asks for information like your salary, your address, and your phone number, it’s generally a soft credit pull.

    Understanding the Importance of Timely Payments

    Whether you’re using a credit card or a BNPL service like Afterpay and Affirm, it’s important to make on time payments.

    When using Affirm, note that they’ll report some payments to Equifax. If you’re paying off your items in four weeks or less, they won’t be reported, but if you’re using a longer payoff timeframe, it could be. This could affect your credit history and credit score if you’re making late payments. It’s best to pay off your loan as quickly as possible.

    Afterpay will not report to credit bureaus, even if you make late payments. They do, however, charge late fees.

    Both companies will also make future lending decisions based on your payment history, so if you want to continue using the apps, you will need to pay off your items as agreed. Purchases are reviewed and need to be approved, so if you’re not making your payments on time, you may find yourself unable to complete a purchase when you’re ready to check out.

    Frequently Asked Questions

    Is there a downside to using Affirm?

    Affirm doesn’t charge late fees, but they do charge interest on some purchase options. That rate could go as high as 30%, which is higher than most credit cards, so it’s important to consider whether the plan you choose is worth the potentially high interest rates.

    Is there a downside to using Afterpay?

    Afterpay is interest free, but they do charge late fees if you aren’t paying on time. Unlike Affirm and regular credit card companies, they don’t report to the credit bureaus, so you won’t get any benefits from paying off your purchases as agreed.

    Does using Afterpay and Affirm build your credit?

    Using Afterpay will not affect your credit history. Using Affirm might, if you’re making payments over longer than four weeks. The longer you’re stretching your payments, however, the more interest you’ll pay, so take this into consideration.

    Are Afterpay and Klarna the same?

    When comparing Klarna vs Afterpay, you’ll find that while they’re similar, they aren’t exactly the same. Afterpay can only be used at participating retailers online (though it can be used for more in-person stores), and Klarna can be used at just about any store that accepts regular credit cards.

    What are some other BNPL services?

    There are a variety of BNPL services to choose from, in addition to Affirm and Afterpay. Here are a list of companies to look at if you want to compare buy now pay later apps:

    • Sezzle: This service is interest free, and the loan term is six weeks. While there aren’t late fees, a missed payment will deactivate your account, and you’ll have to pay a $10 reactivation fee.

    • PayPal Pay: This service offers an interest free loan term of six weeks and doesn’t charge any fees. They will report missed payments to the credit bureaus.

    • Klarna: Klarna offers interest free payments as well as those with interest up to 19.99%. They have flexible loan terms. They do have late fees of up to $27, depending on the financing option.

    Final Thoughts

    If you’re looking for a Buy Now Pay Later app as another payment method to make it simpler to manage your budget as you make purchases, both Affirm and Afterpay are solid companies to consider.

    Affirm vs Afterpay

    There are some considerations to keep in mind if you’re trying to choose between these two BNPL services.

    First, if you think you’ll be making purchases that you’ll need to extend payments for more than six weeks, Affirm will probably be your top choice. Afterpay only offers one plan for each purchase, and that’s to pay off the purchase price in four payments over six weeks.

    If you don’t want to pay interest at all, you may want to go with Afterpay. They don’t charge interest, while Affirm does on some payment plans.

    On the other hand, if avoiding late fees is important to you, keep in mind that Affirm doesn’t charge them and Afterpay does.

    Also, Affirm reports some payments to the credit agencies. If you’re afraid you might make late payments (and don’t mind paying the late fees), you will have the security of knowing that if you choose Afterpay, they won’t be reporting these transgressions to the agencies in charge of creating your credit score.

    Keep in mind that you can always get both apps; there’s no rule that says you have to choose one or the other. It’s possible to download both, then use each app for the particular payment plan you’re looking for.

    How Samurai Can Help Manage BNPL Services

    Keeping track of buy now pay later due dates can be a challenge, particularly if you have more than one of these apps installed. Samurai is an app that can help you manage your personal finance by reminding you of these due dates to help you avoid stress and late fees. Learn more about how Samurai can help.

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