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

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

by | Dec 13, 2024 | Holiday, Credit Cards, Loans

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

Fraud | idLock

buy-now-pay-later-vs-credit-card

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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10 Tips for Budgeting Your Holiday Season

10 Tips for Budgeting Your Holiday Season

by | Nov 1, 2024 | Loans, Credit Cards, Family Finances, Holiday

10 Tips for Budgeting Your Holiday Season

Family Finances | Credit Cards

Group of friends taking a selfie

While the holiday season is a time of joy and celebration, it often has a significant impact on our finances. As holiday expenses – food, gifts, travel, and more – continue to rise each year, effective budgeting is essential to maintaining financial health into the new year. We have compiled a list of budgeting tips to help you survive he holiday season.

1. Get a Head Start

Did you know that 48 percent of Americans kick off their Christmas shopping before Halloween? While some people think the holiday shopping season is starting earlier every year, there is a reason why. If you wait until the last minute to begin holiday shopping, you risk losing out on the best deals, ample shipping time, and experience a higher financial impact to your wallet. Other benefits include:

  • Wider selection
  • Exclusive deals
  • Reduced holiday stress
  • Better planning
  • Improved shipping times
  • Opportunity for price adjustments

The earlier you shop, the better chance you have at stacking discounts and staying within your holiday budget.

2. Set Spending Limits

A good way to approach the holiday season is to set spending caps on your holiday shopping. First, look at your regular monthly budget, what are your everyday expenses for food, bills, and other necessities? Once you have a clear idea of how much you need to set aside, start adding in how much you expect to spend on presents and other holiday items. If you’re not sure, use last year’s holiday spending as a realistic reference.

Once you have your spending limits, it will help you set expectations early for how much you can afford. For example, you might decide to give four gifts to each of your kids, all totaling a certain amount. If your kids know this ahead of time, it might prevent disappointment Christmas morning. Additionally, if your budget doesn’t allow you to buy gifts for all of your family and friends, you can communicate early on, agreeing on price limits or not exchanging gifts at all.

3. Prioritize Bill and Other Essentials

It is important to prioritize your monthly essentials over your holiday nice-to-haves. There are plenty of memories you can make during the holidays that don’t revolve around money or gifts. Try to curb impulse buying and set aside money for your most important items – rent/mortgage, utilities, insurance, loans, and so on. Try sitting down with your family or friends and come up with ways you can spend time together this holiday season. These experiences may be more fun, less stressful, and easier on your budget!

4. Take Advantage of Holiday Sales

As the holiday season approaches, pre-holiday sales – such as Amazon Prime Day, Walmart Deals, Target Circle Week, Labor Day sales and more – offer consumers significant savings. These events allow consumers to shop early, stretch their budgets, and reduce holiday stress.

5. Track Your Spending as You Go

You do not want to make a holiday budget and then fail to track your spending. You can do it the old-fashioned way by saving receipts or handwriting them on a piece of paper. Or, you can automate it with an app on your smartphone.

6. Shop Online and Compare Prices

Online shopping allows you to compare prices, access a wider selection of products, read reviews and research without ever leaving the comfort of your home. Plus, many retailers offer free shipping and returns during the holiday season.

christmas credit card

7. Leverage Cash-back and Reward Programs

During the holiday season, your spending increases on travel, dining, and festivities. Did you know you can maximize your credit card rewards during the holiday season while your spending big? Most credit cards, like the JVB Simply Rewards Visa  Signature Credit offer one point per dollar spent, but multiple points on special categories like groceries, gas stations, discount stores, fast food, or restaurants, depending.

  • Cash Back: If you have a cash back card, this is a great time to build up points. You can get cash back to pay for those Thanksgiving grocery bills or prepare early for Christmas presents.
  • Travel: If you have a travel rewards card, you can book holiday flights with points or build up points by booking flights.
  • Merchandise and Gift Cards: Another way to use your rewards is to get merchandise or gift cards. You can then use these gift cards to buy gifts, or use as gifts!

Whether you’re booking flights, meeting family for a festive dinner, or buying gifts, you can leverage your credit card rewards for significant savings.

8. Manage Credit Card Use

Consider using a single credit card for all holiday purchases, making it easy to track spending and prevent overspending. It’s often tempting to defer payments during the holiday season by using credit cards or buy-now-pay-later options, however, use this with caution. Taking advantage of a 0% APR offer may allow you to avoid paying interest on the balance for 6 or 12 months. However, its crucial you pay the card off before the promotional period ends. To avoid accumulating debt, make sure all payments fit within your overall budget and you have a set timeline for repayment.

9. Reuse Last Year’s Decorations

New can be exciting, but when it comes to last year's Christmas decorations, you can reuse them! Christmas decorations can be expensive, and many of the latest trends are minor changes from the items you have in storage. Save money this year and deck the halls in last year’s ornaments and décor.

10. Open a Holiday Savings Account

Some banks and credit unions offer special, low-fee savings accounts for year-round savers to set aside holiday money, known as Holiday Savings Accounts. Some accounts come with benefits, such as automatic savings deposits and the option to receive the disbursement by a direct deposit or check on a certain day close to the holiday season for as little as $1 to open. There are many benefits to opening a holiday savings account, these include:

  • Build your holiday savings account throughout the year
  • Monitor your progress with online and mobile banking
  • You get a deposit in mid-October to get an early start to your holiday shopping
  • Earn interest on your holiday savings

It’s never to early to start saving for next year’s holiday season. Open a Holiday Savings account today!

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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