Buy Now Pay Later vs. Credit Card: Which is right for you?

person's hand holding credit card in front of laptop

Buy Now Pay Later (BNPL) service is a hot topic right now, not just within the financial industry, but in almost every aspect of life. The use of BNPL has expanded across the world, especially amid the financial troubles of the Covid-19 pandemic. It has been projected that the global BNPL market will see a whopping surge of 400% to US$352 billion by 2025.


However, when it comes to Buy Now Pay Later, the first thing that comes to people’s mind would be the conventional way of paying instalments via credit card. In this post, we will shed some light on the differences between Buy Now Pay Later and credit cards so that you as a consumer can better decide which is the right financing option for you.

What to Consider

It all depends on how much financial flexibility you require, how much will either of the choices cost you, and whether you want predictability or incentives.


Before you decide whether its BNPL or Credit card, consider the followings:

1. The kind of financing flexibility you need

According to a C+R Research study, 45% of BNPL users said it was simpler to make payments that way rather than using credit cards, and 44% said it provided more flexibility.


“If you have a credit card, you have to pay at least the minimum amount at the end of the month,” says Czarnecki, “but with buy now, pay later, you could have a three-, five-, or 12-month option. You may plan for payment in a variety of methods that suit your needs.”


However, when it comes to where a consumer can use either of the services, credit cards provide greater flexibility and options as they are widely accepted everywhere, online and in-store. While in the case for BNPL service, consumers are only able to make purchases from only retailers that offer BNPL service as one of their payment options.


In short, BNPL provides more flexible payment terms while credit cards are more flexible when it comes to the payment location.

business woman thinking account

2. The cost and accessibility of the financing

The interest rates and costs charged by BNPL firms vary greatly. Some providers do not impose interest or fees, thereby making them interest-free financing for the consumer. Payment networks earn money on interchange fees for credit cards, while BNPL providers make money through merchant fees charged on every transaction made.


Most BNPL providers do not conduct credit checks as part of the application process. The option is offered to users based on their repayment history, demographic information and basic financial information, making financing more accessible.


Credit card providers, on the other hand, nearly always pull your credit when you apply, so it may not be a favourable choice for you depending on your credit score.


If you already have a credit card and are thinking about using it to finance a purchase, keep in mind that interest rates on credit cards generally vary and can be quite high (18% per annum in Malaysia). Other credit card charges include annual fees, penalty charges for late payment, and more.

3. Decide whether you want incentives or convenience

When you make purchases with a credit card, you can receive cashback, points, or miles. If you have decent credit, you should be able to locate a card that offers cashback on every transaction, which may add up to significant savings.


Other advantages, such as purchase protection and insurance, are usually included with credit cards. These types of reward aren’t always available with BNPL providers. However, as more BNPL services are beginning to offer attractive promotions, BNPL market may see a future with as many rewards and purchase protections that would benefit its loyal consumers in the long run.

4. Speedy, convenient and user-friendly

In comparison to credit cards, there is an intuitive moment to BNPL that some consumers — and even some experts — find appealing. According to Czarnecki’s research, he purchased furniture following relocation and chose to finance the purchase with a buy now pay later plan.


He explains, “It simply appeared extremely user-friendly. I could just click on it from the cart, and I knew it would be approved right away.”


It was also simpler for him in terms of budgeting. “Unlike a credit card, where I could also have a tank of petrol and food to pay off,” he says, “I know precisely how much I have to pay off.”


For the sake of convenience, he was ready to forego rewards. As is the case with most people.

Should You Choose to Shop Now Pay Later with BNPL?

pay online

BNPL is a fascinating case of how fintech is redefining the boundaries of what is possible with money. This cashless payment option allows shoppers to make purchases in instalments even by using a debit card.


BNPL squeezes the most value and usefulness out of consumers’ lines of credit by using their hard-earned credit to stretch payments over time.


When used appropriately, buy now pay later may allow more individuals to stretch their Ringgit and enter the market, providing a much-needed stimulus to the global economy.