At a Glance

In the modern world of consumer finance, purchasing options have expanded beyond traditional methods. Buy Now, Pay Later (BNPL) and credit cards are two popular choices that allow consumers to manage their payments differently. Understanding the differences between these options is essential for making informed financial decisions. Let’s delve into the disparities between BNPL and credit cards, weigh their pros and cons, explore how they function, and help determine which option suits your needs.

In this article, you’ll learn:


of people that use buy now, pay later services do so to make a purchase they couldn’t afford otherwise, according to a survey by The Motley Fool Ascent.

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Buy now, pay later vs. credit cards: key differences

1. Age restriction

One of the primary distinctions between BNPL and credit cards is the age restriction. Credit card applications typically have a minimum age requirement, ranging from 18 to 21, depending on the country and local regulations. In contrast, some BNPL services allow individuals as young as 16 to make purchases, albeit with certain limitations.

2. Access and ease

Credit cards provide a revolving line of credit that can be used repeatedly up to a predefined credit limit. They offer widespread acceptance and can be used at various merchants globally. On the other hand, BNPL services are generally limited to specific retailers that have partnered with the BNPL provider. While credit cards offer broader access, BNPL can be more convenient for specific purchases.

3. Interest rate

Interest rates are a crucial factor in determining the cost of borrowing. Credit cards often come with variable interest rates, and failing to pay the full balance by the due date can lead to high-interest charges. In contrast, BNPL services usually advertise interest-free periods, allowing users to split payments over time without accruing interest. However, some BNPL agreements may charge interest if payments are not made according to the schedule.

4. Credit impact

Using a credit card responsibly can positively impact your credit history and score. Timely payments and maintaining a low credit utilization rate can enhance your creditworthiness. BNPL services, in most cases, do not report payment history to credit bureaus. Consequently, using BNPL might not have the same effect on your credit profile as a credit card.

Related: Does Buy Now, Pay Later Affect Credit Score?

5. Protection

Credit cards offer consumer protection benefits, such as chargeback rights, which allow you to dispute unauthorized or faulty transactions. These protections can provide peace of mind when making online purchases or dealing with unreliable merchants. BNPL services may have varying levels of consumer protection, and it’s important to understand the terms and conditions before using them.

6. Debt problem

Credit cards can potentially lead to high levels of debt, especially if used recklessly or if the cardholder carries a balance from month to month. BNPL services, with their structured repayment plans, might offer a more predictable way to manage payments and avoid revolving debt. However, overspending with BNPL can still result in financial strain.

Pros and Cons: BNPL vs credit card

Pros of using BNPL

  • Interest-free periods: Many BNPL services offer interest-free periods, allowing you to make purchases without incurring additional costs if paid on time.
  • Convenient repayment: BNPL splits payments into manageable installments, making it easier to budget for larger purchases.
  • No Impact on credit: BNPL usage typically doesn’t affect your credit score.

Cons of using BNPL

  • Limited merchant acceptance: BNPL options are limited to partner merchants, reducing flexibility compared to credit cards.
  • Potential late fees: Missing payments or failing to adhere to the schedule may result in late fees or interest charges.
  • Consumer protection variability: Consumer protection benefits may vary between BNPL providers and may not be as comprehensive as credit card protections.

Pros of using a credit card

  • Widespread acceptance: Credit cards are widely accepted, allowing you to use them at various merchants.
  • Building credit: Responsible credit card use can help you establish and improve your credit history.
  • Consumer protections: Credit cards often have strong consumer protection benefits, including chargeback rights.

Cons of using a credit card

  • Interest charges: Carrying a balance on a credit card can lead to high-interest charges.
  • Potential debt accumulation: Overspending or carrying a balance can result in accumulating high debt levels.
  • Impact on credit score: Mishandling credit card payments can negatively affect your credit score.

How credit cards work vs. BNPL?

Credit cards provide a revolving line of credit that can be used for various purchases. You can make purchases up to your credit limit and must make at least the minimum payment by the due date to avoid interest charges. Any unpaid balance carries over to the next billing cycle.

BNPL services, on the other hand, allow you to split your purchase amount into multiple installments, typically over a few weeks. Interest may not be charged during the interest-free period, but missing payments or extending the repayment period could lead to additional charges.

Should you use BNPL or a credit card?

Choosing between BNPL and a credit card depends on your individual financial situation and needs. If you’re looking for short-term financing for specific purchases without incurring interest, BNPL might be suitable. However, a credit card could be a better choice if you value the benefits of widespread acceptance, building credit, and comprehensive consumer protections.

How to decide between a credit card or buy now, pay later?

  • Assess your needs: Consider your spending habits, payment preferences, and the types of purchases you typically make.
  • Credit goals: A credit card might be more beneficial if you aim to build or improve your credit.
  • Merchant acceptance: Determine whether the BNPL options align with the retailers you frequently shop at.
  • Budgeting: Evaluate your ability to make payments within the stipulated time frame for BNPL or manage credit card payments.


BNPL is a type of point-of-sale credit that allows consumers to defer payments for purchases over a short period, often interest-free. It is typically offered by third-party providers in partnership with retailers.

Some credit card issuers have introduced their own versions of BNPL, allowing cardholders to split certain transactions into installments. These options might offer similar benefits to traditional BNPL services. Here are some examples of common credit cards that offer similar services:

  • AmEx Plan It
  • My Chase Plan
  • Citi Flex Pay
  • Barclays Easy Pay
  • U.S. Bank ExtendPay
  • Mastercard Installments

Note that services could be slightly different, so be sure to check the fine print.

BNPL services often provide interest-free periods and structured repayment plans, making them suitable for budgeting and avoiding long-term interest charges. Additionally, BNPL may not impact your credit score.

Compare: Best Buy Now, Pay Later Apps