Buy Now, Pay Later Expands to Credit Cards — What You Should Know


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With online spending becoming the norm for a substantial portion of the US population, buy now, pay later (BNPL) services are soaring in popularity — a March study from Adobe indicates that BNPL revenue has skyrocketed since the beginning of the COVID-19 pandemic.

BNPL companies have more recently started to offer the same convenience and zero-interest installment payments through credit cards concerning in-store purchases. What does this mean for American consumers?

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Buy now, pay later plans are being offered as a convenient credit alternative — one that enables purchases to be made in installments, typically four payments over six weeks. The fintech (financial technology) companies offering these plans often advertise them as providing consumers with interest-free payment plans which (ideally) have no negative impact on credit scores. As GOBankingRates recently reported, however, credit bureaus such as Equifax, TransUnion, and Experian are looking to include BNPL consumer history in credit reports.

Consumers can use BNPL offerings from firms such as Affirm, Klarna, PayPal’s Pay in 4 and Sezzle, as well as others at brick-and-mortar stores like Macy’s, Target and Walmart. Online retailers like Amazon also participate.

The BNPL option has quickly been adopted by traditional banks and major credit card companies to compete with existing fintech offerings. American Express (Pay It Plan It), Chase (My Chase Plan) and Citibank (Flex Pay) all offer BNPL point of sale card options.

Pros and Cons of Buying With BNPL

Adding a BNPL plan to your existing credit card may help you pay off your purchases in installments without having another large up-front bill to worry about. BNPL plans may limit your tendency to overspend (although some say there is an added tendency to overspend, due to the fulfillment that comes with instant interest purchasing) and the promise of-free payments with low risk to your credit score is enticing, too.

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Popular or not, an increase in BNPL options like credit card linking won’t quell common warnings with using “credit.” BNPL purchases require direct payment deductions from either credit or debit cards. Because each BNPL purchase comes with its own set of payment due dates — unlike the fixed payment date for a credit card bill — these ongoing deductions can easily lead to consumers incurring additional bank fees assessed for insufficient funds and overdrafts.

If you cannot afford payments, BNPL plans carry interest, penalties and credit score impacts just like credit cards — so it is crucial to research the financing terms with these options. Additionally, many BNPL transactions do not automatically come with product return or fraud protections that most credit cards offer.

BNPL Plans are Here to Stay

Regardless of the various pros and cons, BNPL options are here to stay and will continue to evolve as consumers look for more spending options (and ways to customize their credit outlets).

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Find: Attitudes Toward BNPL Differ by Generation, but Use Is Similar

BNPL cards are just the first step to personalized hybrid credit solutions according to Ahon Sarkar, general manager at banking as a service (BaaS) provider Helix. “You will start to see the way that we interact with credit as a society change a little bit,” he said of BNPL’s emerging popularity, per Time. “I think you’ll see these different credit instruments become more interchangeable… Over time, you’ll start to see these things get personalized to each user.”

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About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to change careers in 2016 and concentrate full-time on all aspects of writing. He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry.

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