Holiday shopping season is in full swing. What’s the best way to pay for those purchases, BNPL or credit cards?
The face-off Holiday shopping season is in full swing. Despite economic headwinds, there’s some evidence that consumers aren’t planning to curtail their spending on gifts and celebrations. While 37% of U.S. households say “their financial situation is worse than last year,” overall holiday spending is “expected to match 2021 levels, at $1,455 per consumer,” according to Deloitte’s 2022 holiday retail survey.
As you head out to stores or hunt for the perfect stocking stuffer online, what’s the best way to pay for those purchases? Should you use buy now, pay later or a credit card? “As consumer advocates we feel that the way things are now, BNPL is more likely to hurt you than help you,” said Chuck Bell, the advocacy programs director at Consumer Reports and author of a recent white paper on BNPL. “You could get dinged for any loan payments you may miss.”
But there are some points in favor of using credit cards over BNPL. The biggest is that using a credit card helps you build your credit, while BNPL doesn’t. BNPL can be appealing because it’s so easy to get started with but the flip side of that is that it doesn’t help you improve your credit score, Rossman said. “It’s a little bit of the chicken and the egg kind of thing.
Credit cards aren’t required to build your credit score, but using them and paying the bills on time definitely helps. “BNPL takes a lot of heat for a lot of reasons and deservedly so, but the truth is, if you use BNPL wisely it can be a really good deal,” Schulz said “It gives you a short-term interest-free loan that can help people who just need a little bit of extra time to purchase something.”
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