Buy now, pay later (BNPL) plans are becoming more popular, especially among Gen Z and college students. While BNPL plans may offer flexibility and convenience, it’s important to be aware of some of their limitations. This article will help you compare buy now, pay later vs. credit cards to help you understand how they differ—and which is right for you.
Buy Now, Pay Later vs. Credit Card: Which is Right for You?
10 min read
Last Updated: March 26, 2025
Table of contents
Key Takeaways
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Buy now, pay later (BNPL) plans let you break up large purchases into a series of installments.
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There are pros and cons to BNPL plans vs. credit cards, depending on your financial goals and spending habits.
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You’ll need to meet age, income, and other requirements to get a credit card or be approved for a BNPL plan.
What is a buy now, pay later plan?
While both a credit card and a buy now, pay later (BNPL) plan may help you finance a big purchase, they’re not the same thing. A buy now, pay later plan is a type of short-term financing plan, or installment personal loan, that gives you more flexibility to make large purchases. Customers can enter BNPL plans in two ways: either by selecting a BNPL payment option during the checkout process, or by signing up for a service that offers BNPL plans at select retailers. Examples of these services include Paypal, Affirm, Klarna, and Afterpay.
A BNPL plan allows you to make purchases immediately and pay for them over time, typically through a series of installments. If you choose the BNPL option at checkout, you may pay a down payment up front. The rest of the cost is split into regular payments.
An installment payment is usually due every two weeks or each month. One of the key attractions of BNPL plans is their low or no interest charges, provided payments are made on time.
Note that you may be able to choose a BNPL payment plan for certain credit card transactions, depending on your credit card company. While each credit card issuer may have unique BNPL guidelines, your BNPL credit card purchase usually has a lower interest rate than other card transactions. But keep in mind, it may come with its own fee.
How do buy now, pay later plans work?
A BNPL plan allows you to make a large purchase, like buying a new laptop for college, by paying a portion of the item’s price during checkout. You’ll make the remaining payments in a series of installments, generally over a period of several weeks or months. Installment plans are typically interest-free, but fees and rates can vary, so be sure to read the fine print.
Imagine Becky wants to buy a new smartphone priced at $800. She doesn't want to pay the full amount upfront, and she's also wary of using a credit card due to the interest rate. During checkout, she chooses a BNPL option that splits her payment into four installments of $200 each, to be paid over eight weeks. Becky pays the first installment immediately and takes the phone home. She then pays the remaining three installments bi-weekly. This arrangement may allow her to manage her budget more effectively without incurring any interest, as long as she makes her payments on time. This flexibility and ease of payment make BNPL a popular choice for larger purchases that consumers prefer to pay off over a short period.
What are the differences between BNPL vs. credit cards?
BNPL plans are offered and accepted by an increasing number of U.S. retailers, according to the Office of the Comptroller of the Currency, so it’s worth comparing the pros and cons of BNPL vs. credit cards. Both empower you to pay off purchases gradually with installments—but there are also significant differences when it comes to interest, fees, eligibility, and rewards, along with many other factors that we’ll explore below.
Imagine purchasing a new computer priced at $1,000. Using a BNPL service, you might be able to split this amount into four equal debit card payments of $250, due every two weeks, without interest, provided you pay on time. This option may make the purchase more manageable for some without the immediate responsibility of paying the full price.
On the other hand, you could charge the full $1,000 to your credit card. If you don’t pay off the balance in full by the next billing cycle, you'll incur interest on the remaining balance. Credit cards offer more flexibility in how much you pay each month (as long as you meet the minimum monthly payment). But the longer you take to pay off the balance, the more interest accumulates, potentially making the computer more expensive over time.
Both options have advantages: BNPL for its structured, short-term repayment without interest, and credit cards for their flexibility and potential rewards. However, the choice depends on personal financial situations and preferences.
Age requirements
The Credit CARD Act of 2009 requires you to be at least 18 years old to open a credit card account. Generally, 18 is also the minimum age to sign up for a BNPL plan. Some BNPL providers may have higher age requirements, such as 21 years, and they typically require users to have a valid form of identification and a payment method to use their services.
If you’re under 18, an alternative is to become an authorized credit card user on a trusted family member’s account.
Opening an account
It’s generally faster and easier to sign up for a BNPL plan than it is to get a new credit card, such as a student credit card. That’s because you can apply and get instantly approved for a BNPL plan at the point of purchase—or, as an alternative, sign up in advance using a BNPL service.
You may also get a rapid decision when you apply for a credit card, especially if you go through the pre-approval process. However, it may take 7 to 10 days before you receive your physical card in the mail.
Interest and fees
Buy now, pay later services have gained popularity as a convenient payment option, allowing consumers to make purchases and pay for them over time, typically in installments. Many BNPL services don’t charge interest if payments are made on time, which is a key appeal for consumers looking to avoid traditional credit card interest. However, per the Office of the Comptroller of the Currency, each late installment payment can incur fees, which vary depending on the BNPL lender and can include a flat late fee, percentage-based penalties, or compounding interest.
Credit cards offer a revolving line of credit with a set credit limit, allowing consumers to make purchases and pay for them over time. Unlike BNPL services, credit cards typically charge interest on balances carried beyond the grace period, which is at least 21 days after the end of the billing cycle, according to the Credit Card Act of 2009. Fees and interest rates also vary by credit card, with interest accumulating on any unpaid portion of your balance. For example, Discover offers a variety of low intro APR balance transfer credit cards. Review each card’s features to find the best credit card for you.
You generally don’t have to pay an additional fee to use a BNPL service. Depending on your credit card issuer, you may have to pay an annual fee to keep your card active. But credit cards that charge an annual fee often give you access to features that a BNPL plan likely doesn’t have.
Did you know?
You don’t necessarily have to pay an annual fee to access credit card perks. Discover has no annual fees on any of our cards. If you’re looking for the benefits and flexibility of a credit card without a fee, a no annual fee card may be a good fit.
Benefits and rewards
One drawback of BNPL plans is that they typically don’t offer many rewards like cash back on each purchase.
Credit cards, on the other hand, may come with a variety of perks and bonuses. For example, you earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically, with Discover It® Student Chrome.1
Paying off purchases
Credit card accounts are “revolving”, which means that as long as you make the minimum monthly payment, you can carry your remaining balance into the following month. However, interest may accrue on the unpaid balance, leaving you with more credit card debt.
BNPL plans typically split payments into four or more installments. In both cases, it’s important to budget responsibly and make all payments in full and on time.
Impact on credit
When you apply for a credit card, the credit card company usually conducts a hard credit check, which may affect your score. However, using your card responsibly may help you build your credit, as long as the credit card provider reports your activity to a credit bureau.
On the other hand, unlike credit card issuers, not all BNPL plans report to a major credit bureau. That means building your credit score may be more difficult with a BNPL plan.
A missed payment on a BNPL plan may still hurt your credit if it’s transferred to a debt collector, according to the Consumer Financial Protection Bureau.
Purchase protection
BNPL plans don’t offer the robust consumer protection features of a credit card. For example, the Discover $0 Fraud Liability Guarantee ensures you're never responsible for unauthorized purchases on your Discover Card account.2
Earn top-tier rewards and build your credit history with a Discover student credit card3
![Discover it credit card]()
Benefits and drawbacks of BNPL vs credit cards
BNPL vs. credit cards each come with their own advantages and limitations, which means the best option depends on your financial goals and habits. For example, if your goal is to build credit, it may be easier to influence your credit score by using a credit card responsibly than by entering a BNPL plan. Let’s review some pros and cons of buy now, pay later vs. credit cards.
Benefits of credit cards
- Some cards feature generous perks and rewards, plus additional sign-up bonuses for new cardmembers.
- Credit cards are more versatile than BNPL plans.
- You can build your credit with responsible use.
- Your credit card account may give you access to tools and resources, like with a Discover Card you get your free Credit Scorecard with your FICO® Score and more,4 or fraud liability protection.
- You may qualify for certain credit cards with poor credit or no credit history.
Drawbacks of credit cards
- You must be at least 18 to get your own credit card.
- Applying for a credit card can trigger a hard credit check that temporarily affects your credit score.
- Interest will be charged on any outstanding portion of your balance, which is why it’s important to pay your balance in full every billing cycle.
Benefits of buy now, pay later
- You can get approved instantly for a BNPL payment plan.
- You may have the flexibility to choose your payment dates in advance.
- Some BNPL plans are interest-free.
- You generally don’t need good credit or a credit history to qualify for BNPL.
Drawbacks of buy now, pay later
- You typically don’t earn many rewards for each purchase.
- Fewer merchants accept BNPL.
- BNPL is less effective for building credit.
- BNPL plans may be subject to various fees, such as late payment fees or applied interest when missing a payment.
The bottom line
Ultimately, there are both drawbacks and benefits to buy now, pay later vs. credit cards, which is why it’s critical to weigh your options carefully. Some people may benefit from using both options for different purchases. The right strategy for you depends on your spending habits, financial goals, credit history, and other factors.
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