Buy Now Pay Later vs Credit Card: What’s Better?

Buy Now Pay Later vs Credit Card: What’s Better?

In 2025, Australians are spoiled for choice when it comes to flexible payments. Whether you're buying a new phone or booking a holiday, the decision between using a credit card or a Buy Now Pay Later (BNPL) service like Afterpay or Zip is more relevant than ever. But which one is better for your wallet and credit score?

What is Buy Now Pay Later?

BNPL lets you pay for items in instalments—usually interest-free—over weeks or months. Popular providers in Australia include:

  • Afterpay: 4 fortnightly payments
  • Zip Pay: Flexible limits and scheduled repayments
  • Klarna: 4 payments over 6 weeks

Pros of BNPL

  • Easy approval, even with low credit scores
  • Interest-free if payments are on time
  • Quick checkout with online retailers

Cons of BNPL

  • Late fees can add up quickly
  • Doesn’t build your credit history
  • Encourages impulsive spending

What About Credit Cards?

Credit cards offer more flexibility and can help you build a credit profile, but come with interest and require discipline.

Pros of Credit Cards

  • Build credit history and improve score
  • Rewards programs and cashback
  • Wider acceptance and higher limits

Cons of Credit Cards

  • High interest rates if unpaid
  • Temptation to overspend
  • Requires good credit for approval

So, Which Should You Use?


 BNPL Credit Card
Best For Short-term, small purchases Larger or long-term purchases
Credit Impact No credit building Can improve credit score
Interest Usually 0% (late fees apply) 14–22% p.a. if unpaid

Tip: Use BNPL for smaller, planned purchases. Use a credit card for rewards and credit history — but pay it in full each month!

Disclaimer: This guide provides general financial information. Always consider your personal circumstances or speak to a financial adviser.

Hands holding Buy Now Pay Later card and Credit Card 

 

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