Credit cards can quickly come to the rescue when you’re short on cash. But while our plastic friends have often had our backs when faced with a large bill, a new form of payment has grown in popularity: Buy Now Pay Later (BNPL). 

BNPL is a finance option that allows you to make purchases by splitting the cost into monthly payments, often interest-free. Currys, Ikea, ASOS, Pretty Little Thing, and Very.co.uk are just some of the big names offering the option as an alternative to credit cards. 

But which one is better? How do BNPL vs credit cards measure up? Today, we’re delving into the two options to help you get an unbiased option. Let’s go. 

Benefits & drawbacks of credit cards 

When comparing pay later vs. credit cards, it’s helpful to consider the pros and cons of both options. This gives you a transparent view of both, allowing you to choose the one that’s right for you without any false marketing.  

First up, here are the pros and cons of credit cards. 

Benefits of credit cards 

• Credit cards are a convenient option accepted in most in-store and online shops worldwide. 
• Helps you build up your credit score. Responsible credit card use is linked with a positive credit history, leading to favourable interest rates and better loans. 
• Credit cards offer security against fraud. 
• Some credit cards come with rewards, such as air miles, cashback, or shopping discounts. 
• Most credit cards provide grace periods without interest if you pay off your balance before its due date.  

Drawbacks of credit cards 

• Credit cards can have high-interest rates and fees. 
• Failure to pay the credit card balance in full can lead to debt. 
• Credit cards can promote overspending, as the funds are there whether or not you can pay them off. 
• Irresponsible credit card use can lead to a dip in credit score. 
• Using credit cards too often can lead to dependency and financial instability. 

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Benefits & drawbacks of BNPL 

Next, we’ll look at the advantages and disadvantages of BNPL schemes. Remember these before signing up for anything! 

Benefits of buy now pay later 

• Buy now pay later allows you to split your bill into monthly instalments with 0% interest.  
• You can opt for BNPL at the point of purchase, which makes it a quick and easy decision.  
• Responsible BNPL usage can also boost your credit score. 
• Most buy now pay later schemes provide instant approval, making them accessible to everyone.
• Allows you to spread out payments and avoid big, expensive bills. 

Drawbacks of buy now pay later 

• BNPL schemes can lead to potential overspending on items you might not need, such as clothing and electronic devices 
• Some BNPL providers will incur fees and penalties if you're late making payments. 
• Failing to make repayments on buy now pay later schemes can lead to long-term debt.  
• BNPL schemes don’t negatively affect your credit score, but if late payments or defaults are reported to credit bureaus, they can make it harder to obtain credit in the future.  

Buy Now Pay Later vs Credit Cards - How do they measure up? 

So, how does each side fare in the buy now pay later vs credit cards fight? Both options have positives and negatives, so which one is best for you is down to your financial needs. 

Here’s a quick comparison between the main factors: 

• Whilst some providers might charge late fees, if the payment isn’t made on a certain date with BNPL, you won’t be charged any interest. Credit cards are often strict about paying their minimum balance, and users are likely to face interest charges. 
• BNPL is often applied at the point of purchase, meaning a fast application process. Credit cards often have a much longer application process, which means lots of form filling and a long wait before your card finally arrives in the post. 
• Both credit card and BNPL providers generally perform a credit check as part of their approval process and will regularly report your payments to credit agencies. This means you can use it to boost your credit score. Every payment made on time is a positive mark on your report. 
• Both credit cards and BNPL allow you to spread large bills into smaller payments. But be careful as a larger balance on a credit card could mean more interest. 

Get your FREE credit report with Checkmyfile to see what lenders may see when they check your report. Try it FREE for 30 days, then £14.99 a month. Cancel anytime.

Bumper BNPL - How we can help 

Bumper is a Buy Now Pay Later provider for car repairs and servicing. 

We’re here to take away the stress of breakdowns and hefty repairs with 0% interest financing. You can spread the costs and match with an experienced garage near your home. 

When it comes to being accepted, Bumper provides an instant response so you know if you’ve been accepted there and then. 

Learn more about how Bumper works.

Author - Joseph Law

Joseph has been writing about cars for over seven years and writing for Bumper for over two, blending his passion for automobiles with a talent for storytelling.

Joseph has written about engineering and cars for Autozilla, Komaspec, and several engineering manufacturers. When he's not writing or tinkering with one of his five cars, Joseph dreams of owning an Alfa Romeo 33 Stradale.