Buy Now, Pay Later (BNPL) Advantages That Credit Cards Don’t Offer

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woman looks over financial papers while on the computer

Using BNPL to spread out purchases over time has a few advantages over paying by credit card.

Jose Luis Pelaez Inc/Getty Images

  • Buy now, pay later (BNPL) services allow you to spread out payments when you purchase an item.
  • You don’t typically need a high credit score to qualify, and often there’s no interest.
  • Be sure you have a plan to pay off your purchase before you’re tempted to use BNPL.
  • Read Insider’s guide to the best credit cards with 0% APR offers.

One of my biggest financial goals this year is to try to lower how much I’m spending every month on my credit card. In 2021, paying off my bill every month was overwhelming mostly because my purchasing habits turned toward online shopping more than ever during the pandemic.

To help my efforts, I removed all my credit card information from being auto-saved on my favorite e-commerce sites. In just the past three months, this helped me lower my credit card bills by 25%, since I had to think through each item in my cart before getting up and manually entering my credit card information.

However, most of my favorite websites are starting to offer the buy now, pay later (BNPL) feature that not only seems tempting but can sometimes be more beneficial to use.

Since I’m trying to use my credit cards less, I decided to look into some of the BNPL perks that credit cards don’t have. Here’s what I discovered.

We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

BNPL doesn’t usually require a good credit score

Regular APR

16.24% – 23.24% Variable

Recommended Credit Score

Good to Excellent

Regular APR

16.24% – 23.24% Variable

Recommended Credit Score

Good to Excellent

More Information

  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $1,000 when you redeem through Chase Ultimate Rewards®.
  • Enjoy benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases, plus more.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back(SM), your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.

If you want to get approved for a credit card, you have to meet certain criteria outlined by the issuer. You’ll need to show proof of income, established credit, and a

credit score

that meets the issuer’s requirement.

While credit card issuers aren’t always so transparent, each has its own credit score range that they require applicants to have. For example, to be approved for the Chase Sapphire Preferred® Card, you’ll usually need a credit score in the good to excellent range (a FICO score of 670 or higher). Other cards, like the Capital One Platinum Credit Card, only require an average credit scorewhich Capital One defines as having defaulted on a loan in the past five years or not an extensive amount of credit history.

If you have a low credit score (which is defined as a score under 580) or you have a limited credit history, using a BNPL service benefits you since those services don’t approve you based on your income, credit score, or credit history .

All BNPL services approve users based on different criteria which range from checking available funds in your bank account, the history you have using that BNPL service, or funds available on your debit or credit card.

BNPL services don’t usually do a hard credit check which can affect your score

When you apply for a credit card, the issuer will often do a hard inquiry or “hard pull”, which is when they will check your credit before making a lending decision. Usually, these hard inquiries could lower your credit score by a few points, especially if you’re applying for multiple credit cards at once.

When it comes to BNPL services, some don’t do a credit check and others just perform a “soft” inquiry, which doesn’t affect your credit score. Soft pulls aren’t connected to an issuer lending you new credit, so they don’t come with the same penalty that hard pulls do.

BNPL doesn’t charge automatic interest

Most credit cards charge interest on your remaining unpaid monthly balance, which, depending on your APR, can be higher than 20%. With most BNPL services, you typically don’t have to pay any interest on your installments.

For example, if you’re purchasing an item for $500 and using a BNPL service, you could have a four-payment installation plan to pay it off over four months (at $125 a month). However, If you slowly tried to pay that balance on a credit card over the course of four months, with a 20% APR, you’d not only have to pay off the item over four months, but the additional tacked on interest as well .

Your payment schedule is more flexible

When it comes to paying off purchases put on a credit card, you typically don’t have an option to create payment plans to slowly pay off that item over time, unless you also pay the interest (or are using a 0% APR credit card introductory offer that can often lasts12-24 months before the interest kicks in).

Each BNPL service offers payment plans that vary in the number of installments you’ll pay to pay off that item.

For example, one of the most flexible BNPL services, Splitit, allows users to choose the number of installments that suits them and their budget. They also claim to never charge interest or late fees for payments. Some other BNPL services require a 25% payment upfront and three additional payments every few weeks.

You don’t have to deal with extra fees

While credit cards do come with rewards and perks that BNPL services do not offer (like travel benefits or cash back), many come with fees that a user needs to keep in consideration when opening and using their card to make payments. Fees from a credit card might include an annual fee (typically anywhere from $49 to over $500 a year for premium cards), balance transfer fees, cash advance fees, foreign transaction fees, and late fees.

Many BNPL services keep their relationship with you simple. Most don’t charge interest and some even let you push back scheduled payments without any penalty.

If you’re willing to give up travel perks and cash back benefits so you don’t have to worry about paying extra fees, then using a BNPL service is something you should consider.

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