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Buy now pay later (BNPL) splits a purchase into instalments, usually without interest but with fees if you pay late; a credit card gives you a revolving limit with interest-free days if you pay in full, and interest if you don't. Since 10 June 2025 BNPL has been regulated as credit in Australia, so providers need a credit licence and must check that the credit isn't unsuitable for you.
Which is cheaper depends on how you pay. This guide compares the two on costs, regulation and credit reporting, and explains the combination to avoid: paying BNPL instalments with a credit card.
By Better Rate Mate Editorial Team ยท Last reviewed
The short version: BNPL suits a single purchase you can pay off in a few weeks from money you already have. A credit card suits ongoing spending you clear in full each month. Both become expensive when you pay late or roll a balance, just in different ways: BNPL through fees, cards through interest.
| Buy now pay later | Credit card | |
|---|---|---|
| How you repay | Fixed instalments over weeks, or longer for bigger purchases | Any amount above the monthly minimum |
| Interest | Usually none; fees instead | Purchase rate on any balance not paid in full (RBA average standard rate 20.99%, August 2026) |
| Typical fees | Late fees, and on some services account-keeping, payment processing or establishment fees | Annual or monthly fee, late fees, cash advance and foreign transaction fees |
| Where you can use it | Participating retailers, and some arrangements through card networks | Almost anywhere cards are accepted |
| Credit check | Yes, since 10 June 2025; how much is checked depends on the amount | Yes, a full responsible lending assessment, including whether you could repay the limit within 3 years |
| Credit report | Applications, arrangements and late payments can appear | Applications, limits and 2 years of repayment history appear |
| Rewards | Generally none | Some cards earn points or cashback |
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 brought BNPL under the National Credit Act. From 10 June 2025 providers must hold an Australian credit licence and comply with the National Credit Code. Most BNPL contracts fall into a new category, the low cost credit contract, which has caps on the total fees that can be charged in each 12-month period; a BNPL contract whose fees exceed the caps is regulated as ordinary credit.
Providers of low cost credit contracts can use modified responsible lending obligations. They must still get your credit history from a credit reporting body: for amounts under $2,000 (combined across your contracts with that provider) a "negative" check of defaults, enquiries and repayment information, and above $2,000 a partial check that also covers your other credit. Moneysmart adds that all BNPL providers must have complaints and hardship services.
The bigger cost of either is usually behavioural. Moneysmart's warnings on BNPL are that it's easier to overspend, fees add up, and several services at once are hard to track; it also notes that lay-by has no account-keeping or late fees.
Every BNPL application can trigger a credit check, and a lot of checks on your report can be a red flag for lenders, Moneysmart says. Late or missed BNPL payments can be reported and can reduce your score. When you apply for a home or car loan, the lender will see BNPL accounts and consider your commitments. With credit cards, the limit itself counts against your borrowing power even at a $0 balance. See credit scores in Australia.
For a one-off purchase you can clear in a few weeks, BNPL from a debit card or a credit card you pay in full are both low-cost; the credit card may also earn rewards. For ongoing spending, a single credit card with a low limit is easier to manage than several BNPL accounts. If you're already juggling repayments, neither is the answer: the National Debt Helpline (1800 007 007) is free.
Yes. Since 10 June 2025 BNPL providers need an Australian credit licence and BNPL contracts are regulated under the National Credit Code. Most are low cost credit contracts, which have caps on total fees in each 12-month period.
It can. BNPL applications can trigger credit checks, and arrangements, late fees and missed payments can appear on your credit report. Late or missed payments can reduce your score.
If you pay every instalment on time from a debit account, BNPL can cost nothing. A credit card paid in full by the due date also costs nothing in interest. Late BNPL payments add fees, and an unpaid card balance adds interest.
Yes, since June 2025. Under ASIC's guidance, for amounts under $2,000 with a provider they must seek a negative credit check (defaults, enquiries and repayment information), and from $2,000 a partial check that includes your other credit.
Moneysmart suggests linking BNPL to a debit card instead, so you're using your own money and avoid credit card interest.
Card types, fees, interest-free days and credit limits, explained in one place in ourguide to comparing credit cards. When you're ready, tell us how you use a card and we'll match you on rate and fees.
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