Exploring BNPL with Credit Cards: Is it Convenient or Expensive?

Is the approach of utilizing buy now, pay later with your credit card effective, or could it lead to financial pitfalls? Discover the answer today."

Is using BNPL with your credit card a smart move?

The concept of buying now and paying later has always been enticing, particularly for larger purchases—referred to as BNPL (buy now, pay later).

Once popularized by platforms such as Affirm, Klarna, and Afterpay, this trend is now making significant inroads into… credit cards.

But is this really a helpful option or just a clever trap? Let’s explore.

How does BNPL function with a credit card?

Picture this: you just purchased a brand-new $800 smartphone using your credit card.

On your billing statement, aside from the usual options to pay in full or carry a balance with interest, a new option emerges: break this purchase into 6 fixed payments of $140, including a transparent fee. That’s BNPL in action on the card.

Institutions like American Express, Chase, and Citi have already rolled out such services.

For instance, Amex offers Plan It, which allows you to divide purchases above a set minimum, with fees clearly displayed upfront—no unexpected charges at the end of the month. Citi has Flex Pay, while Chase provides My Chase Plan.

The upsides: better control, predictability, and reduced interest

The main benefit is transparency, as BNPL through the card provides a precise estimate of your monthly payments for that purchase, aiding in your financial planning.

Typically, the interest rates are lower than the card’s standard APR, which can sometimes exceed 20%.

In certain situations, there are even zero-interest offers, particularly for purchases made with specific partners or during promotional events.

Another advantage is flexibility, allowing you to choose which purchases to split and use this option only when it truly makes sense.

The downsides: hidden dangers and gradual accumulation

Using BNPL on a card can create a misleading sense of control. Instead of asking yourself, “Can I afford this now?” you might find yourself contemplating, “What will my monthly payments be?” That’s where the peril begins.

Before long, adding up various installments can lead to your statement overflowing with prior commitments, making it tough to accommodate new expenses.

Let’s face it, BNPL is still debt. If you’re already juggling other installment payments, you could find yourself with multiple concurrent payments, which can stretch your finances and elevate the risk of missing payments.

Moreover, consider how it might affect your credit score. Dividing purchases can impact your credit utilization, and depending on the program, the issuer might execute a “hard pull” inquiry.

BNPL vs. standalone apps?

BNPL on cards is in direct competition with dedicated apps like Afterpay, Klarna, and Affirm. While they operate similarly, these apps tend to cater more towards online shopping and short-term payments (like 4x with no interest).

A key benefit of using the card is that no extra app is required and you won’t need approval for each transaction.

Everything you need is accessible through your bank or card app. Conversely, some apps may provide better conditions or unique deals with partners—so taking a look around is advisable.

When is BNPL on the card beneficial?

Here are instances when BNPL on the card could be advantageous:

You need a higher-value purchase (like an appliance) and prefer fixed payments.
The offered fee is lower than your card’s APR and aligns with your monthly budget.
You have a grip on future payments and are not at your card’s limit.
The purchase is premeditated, not impulsive.

Final advice: use it wisely

Like a credit card, BNPL can be a helpful friend or a financial enemy; its effectiveness relies on your usage.
It’s not a miracle fix, yet it can serve as a valuable resource when planned properly.

Before you start an installment plan, consider asking yourself:

Do I genuinely need this now?
Can I pay the entire amount without straining my finances?
Will breaking up the payments benefit me or just delay an issue?

When your responses are genuine and optimistic, using BNPL on your card can be a great advantage. However, if it merely serves as an excuse to overspend, it might be wise to pause, set the card aside, and reconsider.