Credit Card vs Buy Now Pay Later (BNPL): What’s Better for Aussie Shoppers?
- Admin
- 1 day ago
- 6 min read

Buy now pay later services are booming in Australia, reshaping the way Aussies pay for everything from sneakers to smartphones. While credit cards have long dominated the finance space, the rise of buy now pay later in Australia has left many wondering: which option truly benefits today’s savvy shopper?
At Utility Choice, we’re committed to helping Australians make informed financial decisions. In this blog, we’ll break down the key differences between credit cards and BNPL, helping you choose the right payment tool for your needs.
Understanding Buy Now Pay Later: The Modern Shopping Trend
Buy now pay later (BNPL) is a payment method that allows you to make purchases and pay them off over time—usually in weekly, fortnightly, or monthly BNPL repayments, often interest-free.
Popular BNPL platforms like Afterpay, Zip, Klarna, and Humm have taken hold in Australia, especially among millennials and Gen Z. They’re appealing because they offer fast approval, easy app-based access, and flexible repayment schedules.
How Credit Cards Work in Comparison ?
Credit cards are longstanding financial tools issued by banks and lenders. They give you a revolving line of credit with an interest-free period (typically up to 55 days), but you must make minimum monthly repayments—and anything left unpaid attracts interest, often over 18% annually.
Unlike BNPL, credit cards may include annual fees, require stronger credit history, and involve more complex approval processes. However, they also offer rewards programs, fraud protection, and better financial flexibility for larger purchases.
Buy Now Pay Later in Australia: Why It’s Trending
The popularity of buy now pay later in Australia can be linked to a few key reasons:
Instant gratification: No need to wait to save up.
Interest-free options: Unlike credit cards, many BNPL services don’t charge interest if you pay on time.
Simplified approval: Many platforms don’t require a credit check.
Millennial appeal: BNPL suits those who prefer digital-first, short-term financial products.
Recent data from ASIC shows that BNPL usage in Australia has doubled in recent years, with millions of Aussies using services like Afterpay and Zip.
BNPL Repayments vs Credit Card Debt: What’s Easier to Manage?
Let’s compare how BNPL repayments stack up against credit card debt:
Feature | Buy Now Pay Later | Credit Cards |
Interest | Usually interest-free | Interest applies after interest-free period |
Repayment structure | Fixed instalments (weekly/fortnightly) | Flexible, but minimum payments required |
Late fees | Yes, can accumulate quickly | Yes, plus interest compounds |
Impact on credit score | Varies by provider | Reported to credit agencies |
Approval speed | Very fast | Slower, depends on credit profile |
Rewards/Points | Rare | Common with rewards cards |
BNPL repayments are typically smaller and predictable, which makes them easier to manage in the short term. However, multiple BNPL accounts can quickly stack up, making it harder to track spending and potentially leading to financial stress.
When to Choose Buy Now Pay Later Over Credit Cards
Buy now pay later may be the better choice if:
You’re buying a low-cost item (under $1,000).
You want to avoid interest charges completely.
You prefer fixed repayment schedules.
You don’t have a strong credit history.
You want a fast, convenient payment option.
It’s ideal for smaller, one-off purchases like clothes, gadgets, or event tickets.
When a Credit Card Might Make More Sense
A credit card may suit you better if:
You make regular large purchases and can pay them off monthly.
You want to earn cashback, rewards, or frequent flyer points.
You need additional consumer protections or insurance.
You have an established credit score and financial discipline.
Credit cards offer more flexibility for travel, business expenses, or emergency purchases.
Risks to Watch Out For With Buy Now Pay Later

While buy now pay later platforms can be helpful, they come with potential pitfalls:
Late fees: Missed payments can incur multiple fees.
Over-spending: Easy access can encourage impulse buying.
Credit score impact: Some services report defaults to credit bureaus.
Multiple accounts: Managing several BNPL plans can get complicated.
ASIC reports show that many Australians are juggling multiple BNPL services, increasing their risk of financial hardship.
The Hidden Costs of BNPL and Credit Cards
Neither buy now pay later nor credit cards are entirely “free.”
BNPL services may charge merchants a fee, which is often passed on to you through higher product pricing.
Credit cards can attract interest and annual fees if you’re not careful with repayments.
In both cases, failing to pay on time could land you in debt and hurt your creditworthiness.
Regulation and Consumer Protections in Australia
The Australian government is tightening regulation of BNPL platforms under the Credit Act to ensure better consumer protections. Soon, buy now pay later in Australia will face similar responsible lending obligations as traditional credit products.
Credit cards already fall under strict regulation, including mandatory disclosure of fees and interest and stronger hardship provisions for borrowers.
What Do Aussies Prefer? Credit Card or Buy Now Pay Later?
Surveys show a generational divide:
Millennials & Gen Z prefer BNPL for ease and flexibility.
Gen X & Boomers still rely heavily on credit cards for rewards and longer-term financing.
However, many Australians now use both—BNPL for everyday shopping and credit cards for emergencies or travel.
How to Use Buy Now Pay Later Responsibly
Track your spending: Don’t open multiple accounts without a budget.
Set up auto payments: Avoid late fees.
Use BNPL for essential purchases only.
Check the fine print: Understand late fees, repayment terms, and credit impacts.
Final Verdict: Which Is Better?
There’s no one-size-fits-all answer.
Use buy now pay later if you want quick, interest-free access for small purchases and can stick to short-term BNPL repayments.
Use credit cards for bigger buys, travel perks, or long-term financial flexibility—if you can pay off your balance consistently.
The best strategy? Know your habits and combine both wisely if needed.
Let Utility Choice Help You Take Control of Your Finances
Confused about managing your payments and budgeting tools? Utility Choice is here to help Australians like you compare and choose better financial and utility services—from energy plans to digital payments and more.
Compare BNPL alternatives and credit card deals.
Get expert tips on budgeting and repayments.
Take control of your personal finances—stress-free.
Visit Utility Choice today and discover smarter ways to shop and save.
Frequently Asked Questions ( FAQs )
1. What is buy now pay later and how does it work?
Buy now pay later (BNPL) is a payment option that lets you purchase items upfront and repay the cost in instalments over time—typically weekly, fortnightly, or monthly. Most BNPL services offer interest-free BNPL repayments if paid on time.
2. Is buy now pay later in Australia safe to use?
3. Do BNPL repayments charge interest?
4. Can using buy now pay later affect my credit score?
5. What are the risks of using buy now pay later in Australia?
6. Which is better: credit cards or buy now pay later?
7. Can I use buy now pay later for bills and groceries?
8. What happens if I miss a BNPL repayment?
9. Are there any hidden fees with buy now pay later services?
10. How popular is buy now pay later in Australia?
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