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When to Use Buy Now, Pay Later vs. a Credit Card
July 1, 2025
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Buy Now, Pay Later (BNPL) services have surged in popularity, especially among online shoppers. In fact, a 2025 survey found almost 1 in 3 Americans (30%) have used BNPL – yet 24% of those users spent more than they should have, and 15% regretted their purchases.
Credit cards, on the other hand, are nearly universal in wallets but can be costly if misused. So when is it better to click “Pay Later,” and when should you swipe or tap your credit card instead? This guide breaks down the key differences, ideal use cases for each option, and tips to help you decide when to use buy now, pay later vs. a credit card.
BNPL vs. Credit Cards: Key Differences
Buy Now, Pay Later plans and credit cards both let you delay payment, but they work in distinct ways:
Interest & Fees
BNPL installment plans are often interest-free for short-term loans (usually “pay-in-4” over six weeks) and charge no interest if you pay on time. Credit cards, by contrast, carry variable interest rates (often 18–25% APR) on balances you don’t pay off monthly. Both can hit you with fees for late payments, though – BNPL providers may add flat late fees, while credit cards charge late fees and accrue interest on missed payments.
Approval & Credit Checks
Most BNPL services perform only a soft credit check or no check at all, making them easy to qualify for even if you have poor or no credit. Credit cards typically require a credit check and approval process based on your credit score and income. FICO score matters for credit card approvals; BNPL is accessible to many who might not qualify for a card.
Rewards
Using a credit card can earn you rewards – cash back, points, travel miles – on every purchase, as well as potential sign-up bonuses for new cards. BNPL plans do not offer rewards for your spending in most cases. (If you pay with a debit card or bank account through BNPL, you get no perks at all.)
Credit Impact
Responsible credit card use helps build your credit history. Card issuers report payments to credit bureaus, so paying on time can boost your score (and missing payments can hurt it). BNPL generally does not build credit, since most BNPL providers don’t report positive payment history. They can, however, report delinquent accounts to collections, which will hurt your credit. (Notably, some BNPL companies have begun working with credit bureaus, so this could change in the future.)
Acceptance & Convenience
Credit cards are widely accepted almost everywhere – in-store, online, and for all types of expenses. BNPL is only available at participating merchants or through specific apps, usually for online or point-of-sale purchases. If a retailer doesn’t offer BNPL at checkout, you can’t use that method. Credit cards also don’t require you to set up a new loan for each purchase, whereas BNPL is essentially a new mini-loan each time.
Consumer Protections
Credit cards offer robust protections by law and card policy – fraud protection, dispute rights (chargebacks), extended warranties, purchase protection, and more. If a product never arrives or is defective, your card issuer can help reverse the charge. With BNPL, you’re often on the hook once the purchase is made; it’s harder to dispute charges or get refunds through the BNPL provider. In short, credit cards tend to be safer for the consumer if something goes wrong.
When to Use Buy Now, Pay Later
BNPL can be a smart choice in a few specific scenarios – primarily to manage cash flow on big purchases or if you’re not able to use credit. Consider using a buy now, pay later plan when:
1. You need to finance a large purchase at 0% interest.
If you’re making a big purchase and a BNPL service offers a true 0% interest installment plan, it can be very appealing. Breaking a hefty price into, say, four equal payments over six weeks means you get the item now but your wallet takes the hit gradually. This improves your cash flow, which was cited as the top motivator (57% of users) for using BNPL in one survey. As long as the plan is interest-free and you’re confident you can make all payments on schedule, BNPL essentially gives you a short-term, free loan.
However, always double-check the terms: some “pay later” options start charging interest after a promo period or add fees if you slip up. Only commit to BNPL if it’s clearly 0% (or lower cost than your credit card’s interest) and you have a plan to pay it off on time.
2. The purchase will last longer than the payments.
Another good use of BNPL is for durable purchases that provide value over a long time. You don’t want to still be paying off something you’ve already used up or discarded. It’s best if the item outlives the payment plan. For instance, using BNPL for a high-quality laptop, a household appliance, or a work-related course could be sensible – you’ll still be using (and benefiting from) the item by the time you finish paying for it.
Some experts warn that using BNPL for short-lived splurges (fashion, fancy dinners, concert tickets) is a red flag, since those items won’t provide lasting value but leave you with lingering debt. In fact, debt counselors often label such debt as “bad debt” – you’re paying over time for something that doesn’t appreciate or generate future benefits.
So, only use BNPL for purchases that have staying power. A good rule of thumb: if the product or experience will be around longer than the BNPL payoff period, it’s a better candidate. A vacation that you’ll remember for years, a piece of furniture you’ll use daily, or an investment in your education might qualify. A trendy outfit or takeout food? Probably not. BNPL can help with budgeting for worthy, long-term items, but it’s not meant to finance fleeting wants.
3. You don’t have (or can’t use) a credit card.
If you lack access to credit cards – say you have no credit history or a low credit score – BNPL might be an accessible alternative for needed purchases. Many people with poor or no credit turn to BNPL because there’s typically no hard credit check involved. About 26% of BNPL users say they chose it because it’s easy to obtain credit this way. For someone who can’t get approved for a decent credit card, a BNPL plan provides a short-term line of credit without the usual barriers.
This can be useful in a pinch, but be careful. Just because BNPL is easy to get doesn’t mean you should overuse it. It’s still debt. If you’re resorting to multiple BNPL plans because you can’t afford things, you risk overextending yourself – and unlike a credit card, a BNPL provider doesn’t see the other loans you’ve taken out. It’s easy to rack up several “pay in 4” plans at once, leading to a stack of payments due every paycheck.
Studies have shown that BNPL can encourage overspending; in one survey, 59% of users admitted purchasing something they otherwise couldn’t afford using BNPL. If you have no credit card by choice (perhaps to avoid temptation), keep the same discipline with BNPL. Use it sparingly for essentials, and avoid the trap of “easy” financing for unnecessary buys.
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When to Use a Credit Card Instead
In many cases, a credit card is the better tool to pay for your purchase – provided you use it wisely. Credit cards bring advantages like rewards, flexibility, and credit-building that BNPL lacks. Here are the situations when you should stick to (or switch to) a credit card:
1. You can pay off the balance in full each month.
Using a credit card for a purchase is a great choice if you have the cash to pay the bill in full by the due date. In this scenario, your credit card essentially acts like a 30-day, interest-free loan (the grace period), and you’ll pay zero interest. This is the ideal way to use credit cards – and it makes them very powerful. You’ll build positive credit history and potentially earn rewards, with no financing cost. If the choice is between a 6-week BNPL plan or putting the charge on your credit card and paying it off at month’s end, the card wins in simplicity and benefits.
However, only use the card if you’re sure you can pay the full amount. The moment you carry a balance, that purchase can turn expensive. Credit card interest will accrue, and it’s usually much higher than any BNPL interest. As a rule of thumb, don’t put something on a credit card if you couldn’t cover it from your bank account today (unless you have a special plan or promo).
Remember: a credit card can be free financing or an extremely costly way to borrow, depending on your discipline. If you charge $1,000 and only make minimum payments, that “easy” credit card purchase could haunt you with interest for months or years. So, use a card when you can pay in full – and if you can’t, consider BNPL only if it offers a truly interest-free schedule that fits your budget.
2. You want to earn rewards (and other perks).
One of the biggest advantages of credit cards is the rewards. If your card offers 2% cash back, or travel points, or store rewards, every purchase earns a little kickback for you. BNPL plans generally offer no rewards at all. Over time, using a rewards credit card for your spending can save you a significant amount of money or fund your next vacation.
Likewise, credit cards often come with sign-up bonuses – for example, spend $3,000 in the first 3 months and get $300 cashback or 50,000 points. A large necessary purchase (like a new appliance or a semester’s tuition) could help you hit that bonus threshold. If you opted for BNPL, you’d miss out on those bonus rewards.
In short, swiping a card can pay you back, whereas BNPL never will. Of course, these rewards only matter if you’re not paying interest. Carrying a balance and incurring interest charges will wipe out the value of any rewards. So the advice is: use a rewards credit card for purchases you can pay off, to get cash back or points in your pocket. Over a year, putting even routine expenses on a 2% cashback card could effectively give you a small discount on everything you buy. If you’re financially responsible, this is a clear win over BNPL.
3. You have a 0% intro APR promotion available
What if you need to carry a balance for a while? In that case, look at your credit card offers. Many credit cards come with a 0% introductory APR on purchases for a certain period (often 12–18 months). If you have a new card (or can open one) with a 0% promo, you can make a big purchase on that card and then pay it off over the promo period without interest.
This effectively works just like a BNPL plan – you’re not paying interest for a set time – but you also get the advantages of using a credit card (rewards, flexibility to use it anywhere, etc.). Using a 0% APR card offer can be a better choice than BNPL for large expenses, as long as you’re confident you’ll pay off the balance within the intro period. It essentially combines the best of both worlds: structured, interest-free payments and credit card perks.
Just be disciplined – make at least the required monthly payments, and clear the balance by the time the 0% expires. If not, the regular APR kicks in on any remaining balance, which could be steep. But if used correctly, an intro APR credit card beats BNPL for big purchases because it gives you more time (many months vs a few weeks) and still offers rewards and long-term usability of the card.
4. You want to build credit and enjoy protections.
Using a credit card responsibly is one of the fastest ways to build your credit score. Each on-time payment gets recorded in your credit history, helping demonstrate reliability. Over time, this can raise your credit score and unlock better financial opportunities (loans, mortgages, more premium credit cards). BNPL, historically, hasn’t contributed to credit scores – those on-time installment payments typically aren’t reported to bureaus.
That means no matter how diligently you pay your BNPL loans, your credit isn’t improving. (The only time BNPL might affect your score is if you default and the account goes to collections, which obviously hurts your credit.) This is a key reason many experts lean toward credit cards: they help you build credit while BNPL does not. If you’re looking to establish or boost your credit profile, stick with a credit card and use it wisely, rather than relying on BNPL for purchases.
Additionally, credit cards come with strong consumer protections that make them safer for most transactions. If you buy something with a credit card and there’s fraud or a dispute (e.g. the product was never delivered or was misrepresented), you can dispute the charge and the card issuer will investigate. You’re not liable for fraudulent charges beyond a modest amount in the worst case, usually $50 (and most major card issuers waive even that).
With BNPL, getting a refund or reversing a charge can be much more complicated – you’ve taken out a loan to pay the merchant, so you’re in the middle if something goes wrong. Credit cards also often extend manufacturer warranties or offer purchase protection (insuring against damage or theft of items for a short period after purchase). These perks and safeguards only come with credit cards, not BNPL services. So for important or high-value purchases – anything from electronics to travel bookings – using a credit card can give you peace of mind that BNPL simply doesn’t provide.
To summarize, choose a credit card over BNPL if you can handle the purchase responsibly. Pay in full when possible, leverage 0% APR deals if needed, and enjoy the rewards, credit-building, and protection benefits that come with plastic. A credit card used wisely outshines BNPL for most everyday and big-ticket purchases.
FAQ
Does using BNPL affect your credit score?
No, most BNPL plans don’t report on-time payments, so they usually don’t affect your credit. However, missed payments can be sent to collections and damage your score.
Do BNPL plans charge interest or fees?
No, most short-term BNPL “pay-in-4” plans are interest-free if you pay on time. But late fees or longer-term financing can add costs, so always check the terms.
Do you get rewards with BNPL like with credit cards?
No, BNPL services don’t offer rewards. Credit cards, on the other hand, can give you cash back, points, or miles on every purchase.
Should I use BNPL for everyday purchases?
No, using BNPL for small or routine buys can encourage overspending and clutter your budget. Save it for larger, planned purchases instead.
Are credit cards safer than BNPL?
Yes. Credit cards offer stronger protections, including fraud monitoring, dispute rights, and purchase coverage. BNPL has fewer safeguards if something goes wrong.
Conclusion
Buy Now, Pay Later services and credit cards both let you buy now and pay later, but the right choice depends on your situation and financial habits. BNPL can be useful for its zero-interest installments on a big purchase or for those who don’t have credit cards – just be sure the purchase is worth it and that you can pay on time.
Credit cards, meanwhile, offer rewards, help build your credit, and protect you as a consumer, making them a smarter everyday tool if used responsibly. In many cases, a credit card is the better choice – provided you pay your balance in full or take advantage of 0% APR offers to avoid interest. Just because BNPL is available at checkout doesn’t mean it’s always the wisest option.
Ultimately, think about costs and benefits: Will you pay interest or fees? Do you need the item now? Could you earn rewards or improve your credit by using a card? By asking these questions, you can decide the best payment method for each situation. And remember, whichever route you take, staying within your budget is key. Borrowing (via BNPL or a card) for unnecessary purchases can lead to trouble, so use these tools with discipline.
If you do use credit cards, leverage tools and apps to help you manage them. For example, Kudos can automatically find the best card in your wallet for a given purchase and uncover any hidden perks, ensuring you’re getting maximum value every time you pay. By making informed choices, you’ll get the convenience of “buy now, pay later” on your own terms – while keeping your finances healthy.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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