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Published December 18, 2023
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Can You Use a Credit Card to Buy Now Pay Later?

Yes, in most instances you can link a credit card to a BNPL service, but there are risks.

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Buy now, pay later (BNPL) offers a more flexible way to shop online, where you get what you want without having to wait until payday. BNPL is used most by Gen Z (people roughly born between 1996 – 2012). 

While BNPL is promoted as interest-free, consumers pay exorbitant fees when they can’t make their repayments. Depending on the BNPL provider, it might be possible to use your credit card on such a transaction, but it is not advised because paying off one debt with another type of debt is a dangerous habit to get into. 

How to use your credit card to buy now and pay later

There are two common ways to BNPL with a credit card: 

  1. Link your credit card to a BNPL service. 
  2. Get a BNPL card from your bank. 

This will likely change in coming years, as the Australian Government ushers in a regulatory framework for BNPL services. However, as it currently stands, BNPL isn’t regulated under the Credit Act like credit cards are. 

In other words, they’re not subject to responsible lending standards and BNPL providers don’t need to hold an Australian Credit Licence (ACL), which is more reason to exercise caution.

» MORE: Buy now, pay later: What to know before you BNPL

Link your credit card to a BNPL service 

Popular BNPL service providers include Afterpay, Zip Pay, Klarna, LatitudePay, Brighte and Openpay. 

Most providers currently allow you to link a credit card to your payment method, however this might change. For Zip Pay customers in the United States, certain banks have blocked credit cards as a payment method due to responsible lending obligations, and we can expect to see more of these occurrences in Australia. 

How to use your credit card 

Paying for a BNPL service with a credit card is as simple as choosing your credit card as the payment option. If you’re using Afterpay: 

  • Log into Afterpay. 
  • Navigate to My Account. 
  • Click on Billings. 
  • Add a Payment Method and enter your card details. 

You can choose between setting up auto payments or a ‘pay now’ option. 

Benefits & risks 

Linking your credit card to a BNPL account can help avoid missing repayments. BNPL is interest and fee-free, but only if you pay the instalments on time. You can leverage your credit card’s interest-free period and protect yourself from the risks involved with BNPL purchases. You also can accrue rewards points if you have the right credit card. 

But given that many customers have multiple BNPL debts, it can be hard to keep track of all the repayment dates and when your credit card statement is due. Consider alternative payment options such as linking a debit card or bank account. 

» MORE: BNPL vs. credit cards: Which is right for you?

Credit card instalment payment plans 

Much like BNPL, credit card instalment plans split transactions into more manageable incremental repayments. While promoted as interest-free, it doesn’t mean they’re fee-free; set-up and maintenance costs still apply. 

Always read the T&Cs and calculate the costs over the lifetime of the debt. Remember, having multiple instalment plans at once can add a further level of complexity to your finances.

The big four banks all offer instalment plans for credit card balances. They include: 

  • Westpac: SmartPlan. 
  • CommBank: SurePay and StepPay. 
  • ANZ: Instalment Plans. 
  • NAB: NAB Now Pay Later. 

» MORE: What is credit and why do you need it?

Get a BNPL credit card from your bank 

Credit card payment instalment plans should not be confused with specific BNPL products offered by banks. Credit card instalment plans are a feature of an existing credit card, not an account itself. 

On the other hand, a product such as the NAB Now Pay Later is a separate digital card with an account limit, much like a credit limit. You make purchases online with the digital card or in-store with your mobile wallet. To pay off the purchases, open the NAB Now Pay Later account and transfer from the selected account. 

Westpac’s PartPay is another example. To repay via instalments, you need to make the purchase with the PartPay digital card. 

» MORE: Buy now, pay later cards in Australia

Benefits & risks 

You can bypass BNPL providers and do it all from your bank. As with any instalment plan, this gives you more freedom and cash flow, and if done correctly you can avoid paying interest. Having all your financial products with your bank also gives you a centralised, bird’s-eye view of your financial situation. 

However convenient, though, BNPL is still another debt you need to worry about. It promotes spending, especially with money you don’t have.

We live in a society that encourages spending and normalises debt, where digital BNPL bank cards function like additional credit cards – which consumers might not be aware of when they sign up. 

Remember, banks aren’t utility providers but companies designed to make a profit. 

» MORE: How do credit card interest rates work?

Merchant options 

The merchants are also making moves toward BNPL. For example, with Mastercard’s BNPL program, a bank pre-approves BNPL offers and the four instalment payments. Funds are stored in a consumer’s wallet, without the need for a credit card. Consumers can use BNPL via Mastercard at outlets that accept instalment transactions. 

Whichever way you want to use your credit card to pay off a BNPL transaction, be cautious. Credit card + BNPL can allow you to shop now and pay even later (within your card’s interest-free period), earn points and avoid BNPL fees, but if you run on debt your financial circumstances could be badly affected and you could end up with a poor credit score. 

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