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Affirm Review: Why You Should Stay Away

Online shoppers, guess what? There’s a new bad guy in town. This wolf in sheep’s clothing claims to make your life easier, but what they’re really selling is an easier way to go into debt.  

Who’s this wolf? Affirm. Don’t be fooled by their promises of spending freedom. They’re telling you to spend money you don’t have, but you know better than that. Let’s find out exactly why you should stay away.

Our Quick Take

Should you use Affirm? Never. Ever. Ever. It’s a digital loan with high interest rates. It’s a company whose whole purpose is to make it possible for you to buy stuff you can’t afford.

What Is Affirm?

Similar to companies like Afterpay and Klarna, Affirm is a loan provider in the world of digital installment plans. That’s right, they’re in the debt business. They say they’re customer-focused, granting people the opportunity to say yes. But what they’re really setting you up for is saying yes to debt in a new way. (So kind, right?)

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Here’s the deal: Affirm says their payment plan option isn’t “unhealthy debt.” But what does that mean? Is Affirm offering debt on a tight workout or vitamin regimen? Nope. It’s just debt packaged differently. (Because credit cards are so last season?) With digital loans like this, you can go into debt in a couple clicks on a user-friendly app.

Listen, companies like this promise you the luxury of saying yes to instant gratification because waiting like a responsible adult just plain sucks, right? Basically, they assume you have no ability to practice patience for your purchases. No ability to be in control of your money. Thanks for the confidence boost, Affirm.

Affirm talks a big game about helping you, but since it’s a publicly traded company, Affirm has stockholders who are very interested in making lots of money. And how do they do that? Off of your interest payments. One of their slogans is literally “Our mission moves us forward.” Not you. (We aren’t making this up.)

Affirm Makes It Easy . . . to Go Into Debt

Let’s talk a little about how Affirm works.

You have to download the app or go to Affirm’s website to create an account. Account holders have to be at least 18 and be a permanent resident or citizen of the U.S. You hand over your personal info—like your cell number, email address and the last four digits of your Social Security number. And you have to agree to receive texts from Affirm. Oh, and don’t forget, you need a decent credit score too.

Affirm works with thousands of sites and stores. In fact, as of August 2021, even some Amazon customers can go this route. As you’re checking out, you just select Affirm as your payment method.

Then you pick if you want to pay for the item for three, six or 12 months (aka you can space out paying off that swimsuit through the summer, up until Christmas, or all the way through to next summer, when swimsuit companies will offer new suit designs and loan companies will offer up this “convenient” debt cycle all over again). Once you select the financing option and click to purchase the item, Affirm pays the company, and then you have to pay Affirm the amount of the purchase, plus interest.

And let’s talk about that interest. Remember, Affirm is banking (literally) on you paying as much interest as possible so they make more money. The idea of paying off an item in lots of little payments may seem so much more manageable to your budget. It feels like a good idea. But the longer you take to pay, the more you pay. Trust us: That’s not a good idea for your budget (just for theirs).

When it’s time to make a payment, you can use the Affirm app or visit the site. Or you can select autopay and Affirm will withdraw the money straight from your account. Then you don’t have to think twice (which is what they want) about all that interest they’re taking from your hard-earned money. Once the payment schedule you’ve selected is complete, you’re done with that loan.

Side note: Affirm checks your credit to make sure you’re eligible for the loan. The check itself won’t affect your credit score, but late payments can. We’ll cover that gem more in a moment.

Why You Should Stay Away From Affirm

Let’s talk about a few of the reasons why we dislike digital installment plans. To start, interest rates can be high. Like, really high. To give you some perspective, the average credit card interest rate is at 15.91% right now, while Affirm’s rates can get up to 30%!1,2 That’s almost twice as much!

And don’t forget, the longer you take to pay off that loan, the more the interest you pay. (And the more money their stockholders make. Cha-ching.) And speaking of interest, if you return an item, you won’t be refunded the interest you paid Affirm.

Let’s talk about what happens if you miss a payment. Well, as we said, Affirm won’t charge you late fees. But customer reviews on Better Business Bureau say the late payment still damages your credit score—which can be a worse slap in the face than a fee. And though we’re anti-credit score, we’re also anti being sneaky about how your processes work. Also, customers say getting a refund from Affirm after they return an item is often a nightmare.

Bottom line: Affirm is in the debt business. And debt preys on your desire for the good life. Right now. And listen, we’re all about the good life—but you should (and you can!) get there the right way (aka working for it). And guess what? This right way is worth it. Cut out this middleman and pay for the good life with actual money!

This “have it now, pay for it slowly and painfully” mindset has got to end.

When you jump into that, you’re spending money you haven’t even earned yet—and every time you do that, you’re stealing from your future. It doesn’t have to be like this! Use patience and perseverance to save up and pay cash. And if the item doesn’t seem worth all that, then it’s not worth having in the first place.

Is There an Alternative to Affirm?

Yes! Use a sinking fund in EveryDollar. This free budgeting app has a special feature that makes it super easy to save up for something. Instead of letting Affirm tell you how much to pay over an amount of time (with all that lovely added interest), do some math on your own.

How much would you have to sock away to be able to pay for that vacation or vegan leather jacket in three, six or 12 months? Instead of paying Affirm, pay yourself. Set up a fund and stick the money in there.

Guess what—there are no late fees or penalties with sinking funds! And no interest. When you hand someone cash for an item you’ve saved up for, you’re going to actually own it instead of owing for it. You can come back from vacation with memories, not debt. You can wear your jacket knowing it’s actually yours.

Affirm is all about entitlement: “You deserve this stuff now.” We’re all about budgeting and saving—that’s empowerment. 

Listen—the wolves are on the prowl. They want control of your money. But it’s your money. Take control. Become empowered by learning how to ditch all your debt (and never go back, no matter how sneaky the debt is packaged), budget with confidence, and save real cash for emergencies.

You’ll learn how to do all of that with Financial Peace University—available only in a Ramsey+ membership. Plus, you’ll get the premium version of EveryDollar (which makes budgeting even easier with bank connectivity and budget reports). And right now, you can try it for free. Don’t give in. Don’t put this off. Start your Ramsey+ free trial today.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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