When to use buy now, pay later vs. a credit card

Key takeaways

• Buy now, pay later is an increasingly popular way to shop online that lets you split a purchase into multiple payments over time.

• It’s easier to qualify for buy now, pay later without good credit, and it can save you from handing over a large chunk of change all at once.

• Buy now, pay later can lead to overspending, and it won’t help you earn rewards or build credit — yet.

When you’re checking out online for a pair of headphones or a grocery order, you might see an offer from a buy now, pay later (BNPL) lender to break the purchase into payments over time. But is this a smart idea? Or is it better to pay with a credit card?

BNPL is a hot topic due to both its popularity and peril. The short-term financing method has been used by almost 1 in 3 Americans (30 percent), according to Bankrate’s 2025 Buy Now, Pay Later Survey. But it can also lead to overspending — as with 24 percent of users — and regretting purchases — as with 15 percent of users.

Let’s explore some scenarios for using BNPL versus a credit card.

When it makes sense to use buy now, pay later

You’re offered a 0% interest rate to finance a big purchase

The most popular buy now, pay later apps — like Affirm, Afterpay and Klarna — offer versions of an interest-free, four-payment plan. By breaking a big purchase into chunks, you can improve your cash flow, which is the main motivator for 57 percent of BNPL users. And since you’re paying low or no interest, a selling point for 40 percent of BNPL users, your money might be earning more interest somewhere else, like in a high-yield savings account. There’s an opportunity cost to spending that money all at once.

I use Affirm’s Pay in 4 plan to finance my annual ski pass because the steep price tag (upward of $900) is more manageable in bite-sized, interest-free payments. I’m able to budget for my payments during those months without pulling from my savings.

The purchase has long-term benefits

BNPL is often marketed for short-term purchases like clothing, concert tickets and beauty products. And as of recently, BNPL can now be used for food delivery and grocery purchases above $35. However, some debt experts would say that’s a form of bad debt — the product immediately loses value, instead of adding more value to your future like good debt does.

My personal rule of thumb is to only use BNPL for purchases that will last longer than the payoff period. For example, I get six months’ use out of my ski pass and am still skiing after the payments are complete. You could also make the case for using a payment plan for technology, home appliances or travel — you’ll likely still be benefiting from the product even after it’s paid off.

You can’t qualify for or don’t use credit cards

People with poor or no credit may opt for BNPL because there’s typically no credit check — in fact, 26 percent of people say they use BNPL because it’s easy to obtain credit. But be careful here. It’s one thing to borrow from a line of credit when you really need it, and another to overspend on things you don’t need. BNPL is still a form of debt, and could potentially have more of an impact on your credit score — for better or worse — in the future.

Buy now, pay later is a reasonable option if you can make several interest-free payments for a big purchase that has staying power, instead of forking over all the cash at once.

What’s the catch with buy now, pay later?

You’ve probably heard cautionary tales about credit card debt due to the high interest rates that can make a balance spiral out of control. But keep in mind BNPL is a form of debt, too.

And while many BNPL plans are marketed as interest free, they’ll start charging late fees or accruing interest if you don’t make payments on time. Borrowers struggling with BNPL payments may find themselves with a high debt-to-income ratio and fees piling up.

If you have to take on debt to pay for something that’s not a necessity, you should likely reconsider making the purchase at all.

When it makes sense to use a credit card instead

You can pay off your credit card balance in full

Ideally, credit cardholders would always pay off their balance on time and in full to avoid interest charges and help their credit score. If you can make a purchase with your card and have the cash to pay it off at the end of the billing cycle, that’s probably your best bet.

But if you end up carrying a balance to pay for something, using a credit card is an expensive form of debt.

You’ll earn credit card rewards

If your card offers cash back or travel points, swiping it for a purchase has more value than using BNPL. A big expense is also a good way to earn a welcome bonus for a new card. Just keep in mind that if you end up carrying a balance, the interest charges will outweigh the rewards value. So there’s no reason to go into debt to chase rewards.

You’re taking advantage of a 0% intro APR offer

One exception to the rule about not carrying a balance is if you’ve qualified for a 0 percent intro APR on a new card. This offer lets you make purchases and carry a balance with no interest for 12 to 21 months, depending on the card. It’s a decent option for financing a large purchase as long as you can pay off the purchase by the time the intro period ends. Many of these cards also offer rewards, which makes them worth keeping in your wallet in the long run.

You want to improve your credit score

Credit cards can help you build credit quickly when used responsibly. That means applying for a card you’re qualified for, using less than 30 percent of your credit limit and paying your bills on time. BNPL historically hasn’t reported all payment activity to the credit bureaus, although that’s changing. Soon, BNPL might also help or hurt your credit score.

If you use a credit card responsibly and pay your balance in full, you can earn rewards, build credit and even take advantage of an intro APR to make purchases.

It’s also more difficult to file a dispute if you’re unsatisfied with a BNPL purchase, compared to the many legal protections for credit cardholders.

The bottom line

Just because you can use BNPL doesn’t always mean you should. A credit card has more credit-building and rewards-earning perks and better consumer protections. However, credit card interest rates run high, while many BNPL plans don’t charge interest. It’s worth comparing your options for a big purchase that holds value over time.

If you want to combine the two methods, you could also look for a credit card with a buy now, pay later option.