The Real Cost of BNPL Compared to Credit Cards

How BNPL Could Cost You More Than a Credit Card

BNPL (Buy Now, Pay Later) has won over Americans, especially through platforms like Afterpay, Klarna, Affirm, and PayPal Pay.

The appeal is simple: split the cost of a purchase into small, seemingly interest-free installments. But is BNPL really more advantageous than the good old credit card?

The Growth of BNPL in the U.S.

According to data from the Consumer Financial Protection Bureau (CFPB), the use of BNPL increased by more than 400% between 2019 and 2023 in the United States.

On platforms like Amazon and Walmart, this option now appears side by side with credit cards at checkout.

The most engaged audience? Young adults between 18 and 34, many of whom lack a strong credit history or are hesitant to use traditional credit cards.

The model is attractive because it removes barriers: no lengthy credit checks, no annual fees, and the promise of zero interest—as long as payments are made on time.

However, that “as long as” makes all the difference.

The Illusion of “Interest-Free”

BNPL’s main selling point is its interest-free installments. But in practice, this benefit has clear limits.

If a payment is late, platforms can charge fixed fees or interest rates reaching up to 25% annually.
In addition, some companies reserve the right to report late payments to credit bureaus, which can negatively affect a consumer’s score.

In comparison, many credit cards offer grace periods of up to 30 days before charging interest—and still allow users to earn rewards, miles, and cashback.

When the user pays the full balance, the cost of credit is effectively zero. BNPL, on the other hand, offers less flexibility, and a single missed installment can trigger a domino effect.

Lack of Transparency and Control

BNPL spreads purchases across different platforms, which can make it hard to track total outstanding debt.

It’s common for people to have three, four, or even five active plans at the same time—each with different due dates and amounts.

According to a Pew Research Center study, about 40% of Americans who use BNPL admitted to missing at least one payment.

This happens because, unlike credit cards—which consolidate expenses into a single bill—BNPL disperses financial commitments.

The Risk of Silent Debt

One of BNPL’s most concerning effects is silent indebtedness. The absence of a consolidated bill and the psychological appeal of “small payments” create a false sense of affordability.

In 2024, the CFPB warned that more than one-third of BNPL users in the U.S. had resorted to other forms of credit—such as credit cards or personal loans—to cover BNPL installments.

The Role of Credit Cards

Despite their bad reputation, credit cards remain a powerful financial tool—when used responsibly.

They offer fraud protection, rewards, travel insurance, and extended warranties—advantages rarely found in BNPL services.

Credit cards also help build credit history, something essential in the U.S. for anyone looking to finance a car, rent an apartment, or even get a job.

BNPL, on the other hand, remains inconsistent in this area: some providers report data to credit agencies, while others do not.

Another important point is consumer protection. In cases of disputes—such as defective products or incorrect charges—credit card issuers typically offer structured chargeback processes.

A Middle Ground: Using BNPL Strategically

This doesn’t mean BNPL should be avoided altogether. In certain situations—such as small, one-time purchases or seasonal promotions—it can be useful.

What matters is viewing BNPL as a form of credit, not as an extension of one’s monthly budget.

Some best practices include:

• Limiting the number of active plans;
• Reading the terms carefully before each purchase;
• Avoiding the simultaneous use of BNPL and credit cards;
• Keeping a centralized record of payments;
• Setting up automatic reminders for due dates.

BNPL is here to stay—and it will certainly continue to grow in the U.S. It reflects a cultural shift in consumer behavior: the pursuit of convenience, simplicity, and speed.

But like any financial innovation, it demands awareness and responsibility.

For the modern American consumer, understanding this difference is the first step toward using both payment methods wisely—and ensuring that “pay later” doesn’t turn into “pay more.”

Written by

Gabriel Gonçalves