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Buy Now, Pay Later vs Credit Cards: Which is Right for You?

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There are more ways to pay for purchases than ever before. However, whether you’re shopping in-store or online, credit cards are still one of the most used payment methods regardless of the growing attraction of buy now, pay later (BNPL) plans. BNPL lets you split purchases into no interest payment plans but do not offer as many benefits as credit cards.

If you’re not sure whether you should use a credit card or BNPL, or a mix of the two, we’ve listed a few pros and cons of the two options.

 

Credit Cards

Buy Now, Pay Later

Pros:

  • Minimum monthly payments can be paid off over a long period of time, though it is not recommended carrying a balance.
  • Can be used for almost any type of purchase – stores, gas stations, grocery stores, and more.
  • Potential to earn rewards or points.
  • Potential to benefit from sign-up bonuses.
  • Opportunity to improve credit score, with responsible payments.

Cons:

  • Longer application process.
  • Applying for credit cards result in hard credit checks that can negatively impact credit scores.
  • If you do not pay off the card at the end of the monthly billing cycle, you may owe interest.
  • You may have annual fees, foreign transaction fees, and/or late payment fees.

Pros:

  • Fixed installment plans, typically with no interest.
  • Choose the payment frequency that works for you.
  • Instant approval and apply right at check out.
  • Hard credit checks are not always required.

Cons:

  • You cannot earn rewards or points.
  • Not accepted by every retailer.
  • May be charged late fees or interest for late payments.
  • Less likely to increase credit score.

Which is Better?

Deciding which option is best for you depends on your financial situation and long-term goals. BNPLs are usually accepted by online or in-store retailers whereas credit cards can be used almost anywhere, for any type of purchase.

If increasing a credit score or building credit history is your goal, credit cards are a better option for you. But if you have a low credit score or a short credit history, BNPL is a better option for you as it often uses less stringent criteria to approve you. However, it is not an all-or-nothing option, some people switch between one or the other depending on the purchase.

Choose BNPL if:

  • You want to make a large purchase and pay it off quickly.
  • You prefer fixed payments to manage budgeting.
  • You plan to make purchases from specific retailers that offer BNPL.

Choose Credit Cards if:

  • You want flexibility to shop anywhere.
  • You’re looking to build credit and take advantage of rewards.
  • You can manage repayments responsibly to avoid interest charges.

Bottom Line

Both BNPL and credit cards can be useful financial tools, but understanding their differences is crucial for making informed choices. Assess your spending habits, repayment capabilities, and financial goals to decide which option aligns best with your lifestyle. Whatever you choose, make sure to read the fine print and understand the terms before committing!

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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