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Is there a hidden cost to apps like Afterpay?

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Prices of U.S. goods across the board have shot up over the past few months, making high-end items even more out of reach for everyday consumers. But if you’ve shopped online since the pandemic began, you may have noticed that when you add items to your shopping cart, you now have options that could make them seem more affordable.

Depending on where you shop, one of those options might be Afterpay. Using Afterpay, with just a click of a button, a $548 Tory Burch bag costs just $137, the cost of Lululemon leggings is cut from $118 to $29.50, and $170 UGG boots now become $42.50. Afterpay—an example of a “buy-now, pay-later” app—allows you to split the cost of an item into four interest-free installments spread out over six weeks. If you miss a payment, you are charged late fees, which Afterpay says are capped at 25% of the item’s price.

Apps like Afterpay have become increasingly popular since the pandemic began due to an overwhelming shift to online shopping, according to Nerdwallet. In 2021, Americans spent $20 million using these apps to make purchases from various retailers, SFGATE reports, and this number may rise in 2022, as the apps start to move into the everyday purchase market by partnering with companies like Rite-Aid. “This partnership will help customers access and spend responsibly on everyday goods with Afterpay’s powerful budgeting tool,” Afterpay said in a statement.

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