Buy Now Pay Later vs Credit Card: Costs, Protection and the 2026 Rules
Buy Now Pay Later (BNPL) lets you split a purchase into a few interest-free payments at checkout. A credit card can do something similar, especially a 0% purchase card. Both are borrowing, and they differ in cost, flexibility and protection. Since 15 July 2026, the most common type of BNPL has also been regulated by the FCA, which changes the comparison.
Key takeaways
- The FCA started regulating Deferred Payment Credit (DPC), the usual interest-free BNPL, on 15 July 2026.
- Regulated BNPL lenders must now run affordability checks, give clear information and support you if you struggle. You can also complain to the Financial Ombudsman Service.
- BNPL taken out before 15 July 2026, or offered by a shop for its own goods, isn't covered by the new rules.
- A credit card gives Section 75 protection on eligible purchases of £100 to £30,000. BNPL works differently.
- For bigger purchases, a 0% purchase credit card can offer a longer interest-free period. You must manage the end date.
This is general information, not financial advice.
What is Buy Now Pay Later?
The FCA describes two types of BNPL:
- Deferred Payment Credit (DPC): interest-free, repaid in 12 or fewer instalments over 12 months or less. This is the familiar "pay in 3" or "pay in 30 days" option.
- Interest-bearing BNPL: longer plans that charge interest, or charge it if you don't repay within a set time. These were already regulated.
This guide mainly compares DPC with credit cards.
What changed on 15 July 2026?
Before 15 July 2026, DPC agreements weren't regulated, so lenders didn't need FCA authorisation or have to follow FCA rules. From that date, third-party DPC lenders must be authorised, or hold temporary permission, and must follow FCA rules. According to the FCA, that means:
- Affordability checks before lending.
- Clear upfront information, including amounts, payment dates, any late fee and your rights.
- Contact when you miss a payment, and support if you're in financial difficulty.
- Complaints can go to the Financial Ombudsman Service.
- The Consumer Duty applies.
What's still not covered
- DPC agreements taken out before 15 July 2026.
- DPC provided by the same business that sells you the goods, for example a retailer's own instalment plan.
You can check a lender on the FCA Firm Checker, as the FCA explains on its BNPL page.
BNPL vs credit card: side by side
| BNPL (Deferred Payment Credit) | Credit card | |
|---|---|---|
| Interest | None if paid on time | Charged unless you pay in full, or during a 0% offer |
| Typical term | Up to 12 months, often weeks | Ongoing. 0% purchase offers can run longer |
| Credit check | Affordability checks now required | Credit and affordability checks |
| Late payment | Late fees may apply | Late fee, interest, possible loss of 0% deal |
| Credit file | Depends on provider and reporting | Reported to credit reference agencies |
| Section 75 | Not the same as a credit card | Yes, on eligible £100–£30,000 purchases |
| Rewards | Usually none | Cashback or points on some cards |
| Use | One purchase at a time, at participating retailers | Anywhere the card is accepted |
Protection when things go wrong
Credit cards
Section 75 of the Consumer Credit Act can make your credit card provider jointly responsible with the seller if something goes wrong with an eligible purchase costing more than £100 and up to £30,000. That covers faulty goods, items that never arrive and companies that go bust. Chargeback can also help, including for smaller amounts.
BNPL
The FCA's consumer page says that if something goes wrong with what you bought using DPC, you may be able to get a refund from the lender. The details depend on the agreement, so read the provider's terms. The Financial Ombudsman Service can now consider complaints about regulated DPC lenders.
Costs to watch
BNPL
- Late fees if you miss a payment. Regulated lenders must tell you the late fee before you sign.
- Collection activity and possible reporting to credit reference agencies if you fall behind.
- Stacking: several small plans across different providers can add up to more than you realise.
Credit cards
- Interest on any balance you don't clear, unless you're in a 0% period.
- Late payment fees, often £12, and the risk of losing a promotional rate. See Credit Card Fees Explained: Late, Over-Limit, Cash and Foreign Fees (UK).
- Revert rate when a 0% deal ends. See What Happens When Your 0% Credit Card Deal Ends?
Which is better for what?
Small, short-term purchases
If you can genuinely pay within weeks, either can work. A credit card you pay in full by the due date costs nothing in interest, may earn rewards and gives Section 75 on eligible purchases.
Larger purchases over several months
A 0% purchase credit card often offers a longer interest-free period than BNPL, works anywhere, and adds Section 75 protection. You need to clear the balance, or move it, before the 0% period ends. See 0% Purchase Credit Cards Explained: How They Work and What to Watch.
If you're already struggling
Neither is a good way to cover everyday bills. If you're using BNPL or a credit card to pay for essentials, contact your lender early and get free help from MoneyHelper or a debt advice charity.
Effects on your credit file
- Credit cards are reported to the credit reference agencies. On-time payments can help build your history, and missed payments can harm it.
- BNPL providers vary in what they report. With regulation, more lenders run checks and share data, so treat BNPL payments as seriously as any other credit.
When you apply for a mortgage or other credit, lenders may ask about BNPL commitments even if they don't appear on your file.
Frequently asked questions
Is BNPL regulated in the UK now?
Yes. The FCA has regulated Deferred Payment Credit, the common interest-free type of BNPL, since 15 July 2026, when provided by a third-party lender. Agreements taken out before that date and a retailer's own credit aren't covered.
Is a credit card safer than Buy Now Pay Later?
A credit card gives Section 75 protection on eligible purchases between £100 and £30,000, which is a strong legal right. Regulated BNPL now has FCA rules and access to the Ombudsman, but its protections work differently.
Does BNPL affect my credit score?
It can. Lenders may run checks when you apply and may report missed payments. Practices vary between providers.
Can I pay a BNPL instalment with a credit card?
Some providers allow it and some don't. Paying borrowing with more borrowing can quickly become expensive, especially if you don't clear the card in full.
Is a 0% purchase card better than BNPL for a big purchase?
Often it gives a longer interest-free period and Section 75 cover. But you'll need to qualify, and interest applies to anything left when the 0% period ends.
This is general information, not financial advice. Check any lender's terms before borrowing.
