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Buy Now, Pay Later vs. Credit Card: Which is Right for You?

5 min read

Last Updated: February 3, 2026

Table of contents

Key Takeaways

Buy now, pay later (BNPL) plans let you break up large purchases into a series of installments.
There are pros and cons to BNPL plans vs. credit cards, depending on your financial goals and spending habits.
You’ll need to meet age, income, and other requirements to get a credit card or be approved for a BNPL plan.

Buy now, pay later plans are becoming more popular, especially among Gen Z and college students. While BNPL plans may offer flexibility and convenience to pay over time, it’s important to be aware of some of their limitations. This article will help you compare buy now, pay later services with traditional credit cards to help you understand how they differ, and which is right for you.

What is a buy now, pay later plan?

While both a credit card and a BNPL plan may help you finance a big purchase, they’re not the same thing. Buy now, pay later may be described as a type of short-term financing plan, or installment style personal loan, that gives you flexibility to make large purchases.

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. BNPL plans may offer low or no interest charges, provided payments are made on time.

Customers may 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 may include Affirm, Klarna, and Afterpay.

Some credit cards provide their own BNPL services with their own unique BNPL guidelines. Your BNPL credit card purchase may also have a lower interest rate than other card transactions, but keep in mind that these transactions may come with their own fee.

How do buy now, pay later plans work?

A BNPL plan allows you to make a large purchase by paying only a portion of the item’s price during checkout. You’ll make the remaining payments in a series of installments.

Imagine Becky wants to buy a new smartphone priced at $800. She doesn’t want to pay the full amount up-front, 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 biweekly. 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. Fees and rates for the service may vary, however, so be sure to read the fine print.

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 enable you to pay off purchases gradually with installments, but there are also significant differences when it comes to interest, fees, eligibility, and rewards.

Here are some general differences between BNPL and credit cards:

	BNPL	Credit card
Age requirement	18 years old	18 years old
Approval time	At checkout	Typically, 7–10 days after submitting application, but some cards may be approved sooner
Interest	Some loans may offer no interest on late payments	Interest accrues on remaining balance after making the minimum payment each month
Potential fees	Late fees, processing fees, and administrative fees that may not be apparent at checkout	Late fees, foreign transaction fees, and annual fees for using the card
Lending type	Individual loan for every purchase made with BNPL	Revolving credit that may be used for multiple purchases

There may be other differences not listed here. Be sure to check your terms and conditions for full information on application requirements and fees.

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.

Learn More

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.

Benefits of credit cards

Some cards feature generous perks and rewards, including cash back or miles on every purchase.
Using a credit card may help build your credit, with responsible use.
You’re never held responsible for unauthorized purchases on your Discover Card.¹

Drawbacks of credit cards

Applying for a credit card may trigger a hard credit check that temporarily affects your credit score.
Interest is charged on any outstanding portion of your balance.
Hitting your credit limit prevents you from putting more purchases on your card.

Benefits of buy now, pay later

You typically get approved instantly for a BNPL payment plan.
Some BNPL plans don’t charge interest.
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 rewards for each purchase.
BNPL is typically less effective for building credit, and not all BNPL plans report to a major credit bureau.
BNPL plans may be subject to various fees, such as late payment fees or applied interest when missing a payment.

The bottom line

Ultimately, both buy now, pay later and credit cards have their advantages. BNPL may offer structured, short-term repayment without interest, while credit cards feature flexibility and potential rewards. The right strategy for you depends on your spending habits, financial goals, credit history, and other factors.

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