Buy Now, Pay Later with Your Credit Card: Smart or Risky?

Is It Worth Using Buy Now, Pay Later with Your Credit Card?

You know that tempting sale that shows up right at the end of the month, when your bank balance is already looking thinner than expected?

That’s exactly when many people turn to the well-known Buy Now, Pay Later option—once only available through apps, but now also offered directly through your credit card.

How Does Buy Now, Pay Later Work on a Credit Card?

In the U.S., several major credit card issuers—like Amex, Chase, and Citi—already offer installment plans directly within your card account.

Here’s how it works: you make a regular purchase, and if it’s eligible, you can choose to split the amount into fixed monthly payments with a preset fee or interest rate.

This option usually shows up right in your bank or credit card app. When you make a purchase over $100, the app may offer to divide it into 6, 12, or even 24 monthly payments.

Instead of going into revolving balance with high interest rates, the purchase becomes part of a fixed payment plan—basically a mini-loan inside your card.

The Upside: Why Do So Many People Use It?

Budget predictability

One of the biggest appeals is knowing exactly how much you’ll pay each month—no surprises when the bill comes.

Convenience

You don’t need to open a new account, download a third-party app, or go through a credit check. You use the same card and the limit you already have.

Often cheaper than revolving interest

Interest rates on these installment plans are usually lower than traditional credit card APRs, which in the U.S. can easily exceed 25% per year.

Helps manage bigger purchases

Installments can make it easier to absorb the cost of larger items without wrecking your monthly budget.

The Downsides and Traps: Where’s the Catch?

It’s still debt

Even with fixed payments and lower rates, this is still a debt. And debt is a financial commitment that can become a burden—especially if unexpected expenses show up.

Interest rates aren’t always that low

While it’s better than revolving credit, installment plans can come with rates anywhere from 6% to 20% annually. It’s important to compare with other financing options.

Encourages impulse buying

You know that “it’s only $20 a month” feeling? That mindset can lead you to stack up multiple installment plans—and suddenly your credit card bill feels a lot less manageable.

Reduces your available credit

When you split a purchase into installments, the full amount gets “locked in” on your credit limit. So if you split a $1,200 purchase into 12 monthly payments of $100, your limit is reduced by $1,200 and only goes back up slowly as you pay it off.

When Can It Be a Good Idea?

• You have good financial control.
• The rate is reasonable and fits your budget.
• The purchase is necessary, and I can’t wait.

When Is It Better to Avoid?

You’re already close to your credit limit

Adding another monthly payment when your card is maxed out can leave you with no breathing room—and no backup in case of emergencies.

You tend to spend impulsively

If BNPL becomes your go-to excuse to buy things you don’t really need, it’s best to steer clear. The “small monthly payment” mindset can easily snowball into big trouble.

There are better alternatives available

Sometimes, a personal loan with a lower rate—or just waiting a month or two to save the cash—could be a much healthier option for your wallet.

Final Tip: Buy Now, but Think About Later

Using Buy Now, Pay Later with your credit card isn’t inherently bad—but it’s definitely not a magic solution either. Like any financial tool, the impact depends on how you use it.

Buying now and paying later can be convenient, sure—but real financial freedom is being able to pay now without getting tangled up later.

Written by

Gabriel Gonçalves