Credit Card vs Buy Now Pay Later in Australia
Buy now pay later (BNPL) splits a purchase into instalments, usually without interest. Since 10 June 2025 it has been regulated as credit in Australia, which narrows the gap between BNPL and a credit card.
How each one charges
| Buy now pay later | Credit card | |
|---|---|---|
| Repayment | Fixed instalments, often four over six weeks | Flexible, with a monthly minimum |
| Interest | Usually none | None if paid in full by the due date, otherwise the purchase rate |
| Fees | Late fees, and on some services monthly account or establishment fees | Annual fee on many cards, late payment fees |
| Limit | Usually lower, set per provider | One limit across all purchases |
| Where accepted | Participating retailers | Almost anywhere cards are taken |
What changed in June 2025
ASIC’s guidance is that from 10 June 2025, anyone providing BNPL contracts must hold an Australian credit licence. In practice that means:
- Providers must be members of the Australian Financial Complaints Authority (AFCA), so you have access to free external dispute resolution.
- Providers must have hardship arrangements.
- Providers have to check that the credit isn’t unsuitable. For lower-cost BNPL contracts a modified version of the responsible lending rules applies.
- Some arrangements have caps on the fees that can be charged.
BNPL and your credit report
Moneysmart’s current guidance is that every time you apply for BNPL, it may trigger a credit check, and that late or missed BNPL payments can be reported and can reduce your credit score. BNPL accounts can therefore be seen by lenders assessing a card or loan application.
Where the costs hide
- BNPL: several small plans running at once, each with its own due dates. Late fees are fixed amounts, so they are large relative to a small purchase.
- Credit card: the option to pay only the minimum, which lets a balance sit and accrue interest. See minimum repayments.
- Both together: paying BNPL instalments from a credit card means two sets of terms, and interest on the card if it isn’t paid in full.
Protections
Card payments carry chargeback rights through the card scheme. BNPL providers have their own dispute processes and, since licensing, AFCA membership. Your rights against the retailer under the Australian Consumer Law are the same however you pay.
If repayments are getting difficult
Moneysmart lists the National Debt Helpline on 1800 007 007 for free financial counselling.
Related guides
Credit card or debit card
How credit cards and debit cards differ in Australia: whose money you spend, interest, fees, fraud protection and the effect on your credit report.
Read the guideCredit scores in Australia
Australian credit score ranges for Equifax, Experian and illion, what goes into a score and how long information stays on your file.
Read the guideFinancial hardship and credit cards
If you can't meet your credit card repayments in Australia, you can ask for a hardship arrangement. How to ask and where to get free help.
Read the guide