Credit cards 💳 always seem to play the villain in personal finance circles. While it’s true that there is a lot of economic danger in abusing credit cards, they’re not always the worst idea in the world. For example, if you have a choice of buying something with a credit card or “taking advantage” of a buy-now-pay-later (we’ll call ‘em BNPLs for short) option, you may be better off whipping out the plastic.
Here are Five Fast Facts on using credit rather than BNPL:
- 📝 Credit Reporting - Credit cards report both good and bad payment history to the credit bureaus. BNPLs may only report if you mess up, and at that point it’s too late to fix it. Kinda' like busting you for breaking a rule you weren’t aware of.
- ✋ Managing Payments - Credit cards try to make it easy to manage and make payments, and usually have online portals where you can do everything you need to do. BNPLs can be harder to juggle, and don’t have the restriction of a credit check to keep people from getting in over their heads. Not that anyone ever gets in over their head with credit cards, but still…
- 🔍 Transparency - BNPLs often don’t provide any of the details or terms about what you’re paying back. Credit cards are pretty heavily regulated so they are required to give you all the fine print. Whether you read it or not is entirely up to you!
- 😡 Consumer Protections - Sometimes a product you buy arrives damaged or goes missing on the way. The top complaint against BNPLs is their dispute resolution category. They often continue charging you while a dispute is being resolved, or they may charge you late fees. Credit cards simplify the process of disputing and getting a refund. You probably can’t dispute your way out of credit card fees, though.
- 💰💰➡️💰 Debt Management - BNPLs usually have limited (or non-existent) options for consolidating debt into lower interest rates. Credit card companies will usually do this on their own, or partner with banks to make it happen. They’re always happy to take more of your money, no matter what form it takes!
🔥Bottom line: Regulation is often an annoyance, but there are times when it actually helps you out. Credit cards are far more regulated than BNPLs, which means there are a lot more built in protections and benefits. There may be times when a BNPL is right, but make sure you fully understand the situation before you do it. Visa and Mastercard are the devils you know, and that’s almost always better than the devil you don’t know!
Have you used a BNPL? How did it work out for you?
Let us know by connecting with us on Facebook and Instagram! Also, remember to share this newsletter with your friends & coworkers!
Btw, If you’ve read this far and haven’t yet signed up for the weekly Paycheckology newsletter, CLICK HERE!
