Credit Cards vs Buy Now Pay Later: Which Is Better?
Credit Cards vs Buy Now Pay Later: Which Is Better?
Australians now have more choices than ever when it comes to flexible payments. Whether it's using a traditional credit card or a Buy Now Pay Later (BNPL) service like Afterpay or ZipPay, both offer convenience—but which one is better?
How They Work
Credit Cards
- Pay with borrowed money, then repay monthly
- Interest applies if you don’t repay the full amount
- May offer rewards or cashback
Buy Now Pay Later (BNPL)
- Split purchase into interest-free instalments (usually 4)
- Must link to debit/credit card for automatic deductions
- No interest, but late fees apply
Pros & Cons
| Feature | Credit Card | BNPL |
|---|---|---|
| Interest | Yes (15–20% p.a.) | No interest |
| Late Fees | Yes | Yes |
| Credit Score Impact | Yes | Varies (usually no unless defaulted) |
| Rewards | Points, cashback, insurance | Usually none |
| Flexibility | High (larger credit limits) | Low to moderate |
When to Use a Credit Card
- You pay off your balance in full each month
- You want to build your credit score
- You value rewards like frequent flyer points or cashback
When to Use BNPL
- You want interest-free short-term flexibility
- You struggle with overspending on credit
- You’re making small purchases you can repay quickly
Affiliate Opportunities – Compare & Apply
- Finder: Compare low-rate and cashback credit cards
- Afterpay: Shop thousands of Aussie retailers interest-free
- Zip: Flexible BNPL with longer-term payment options
Conclusion
Both credit cards and BNPL services have their place. If used wisely, each can be a powerful financial tool. The key is understanding your habits, needs, and repayment discipline.
Next article: How to Build Credit from Scratch in Australia
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