Looking to spread out the cost of a purchase? Both credit cards and Buy Now, Pay Later (BNPL) options offer ways to pay over time. But which one is right for you? Let’s break down the key differences to help you swipe right on the best option.
Flexibility vs. Structure: Credit cards offer a revolving line of credit. You can use your card for various purchases throughout the month, with a minimum payment due on your statement. BNPL, on the other hand, is typically tied to a specific purchase. You’ll split the cost into fixed installments, often interest-free for a set period.
Interest and Fees: Here’s where things can get tricky. Credit cards typically come with an introductory 0% APR (Annual Percentage Rate) period, but interest kicks in after that if you don’t pay your balance in full. BNPL services often advertise no interest, but late fees can be hefty. Make sure you understand all fees associated with both options.
Building Credit: Responsible credit card use can significantly improve your credit score. BNPL services are relatively new, and their impact on credit scores is still evolving. Some BNPL providers might perform a soft credit check, which won’t hurt your score, but it may not help build it either.
Rewards and Protections: Credit cards often come with rewards programs that offer cashback, travel points, or other perks. They also typically offer purchase protection and extended warranties. BNPL services generally don’t offer such benefits.
