Afterpay vs Credit Card

Is it better to use a credit card or a buy now pay later service like Afterpay? The answer is, it depends what you prefer.

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Richard Whitten

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Key takeaways

  • Afterpay has no interest but charges late fees up to $68; credit cards feature interest from 8% plus annual fees.
  • Credit cards build your credit history and offer rewards like points or fraud protection. Afterpay typically does not build credit.
  • Credit cards offer broad acceptance and strong consumer protections. Afterpay is limited to specific retailers.

Finder's verdict: Afterpay or a credit card?

  • Afterpay, and other buy now pay later services can be handy if you need to buy an item today, don't have a credit card and don't have much cash.
  • In comparison, credit cards are a great tool for responsible users, but they come with annual fees, and high interest charges if you don't pay them off.
  • It's easy to get in trouble with Afterpay because of the late payment fees, and because it lets you spend money you don't have. But so does a credit card.

Afterpay versus credit cards

FeatureAfterpayCredit cards
InterestNo interest chargesRates start from around 8% for low rate cards and go up to 23% for premium cards
Annual feesNo annual fee (optional $9.99 a month for Afterpay Plus)$50 up to $450 for some frequent flyer cards (some cards have no annual fee)
Late payment feesBalances under $40: Capped at 25% of original value
Balances over $40: $10, then $7 if no payment is made within 7 days of the due date. Capped at 25% of original value or $68 (whichever is less)		If you pay your minimum monthly payment there's no late payment fee
Where can you use it?You can only use Afterpay with retailers that offer it (which these days is quite a lot).Mastercard and Visa credit cards are accepted almost everywhere. American Express cards are widely accepted too.
Repayments4 equal payments over 4 fortnightsYou can pay your balance in full and pay no interest, but if you just make the minimum payment and carry a balance, interest is charged. This gives you a longer time to pay your spending off than Afterpay, with a cost.
Credit check required?Soft credit check for new customers (no impact on credit score)Yes
Perks and benefitsAfterpay's app lets you track your spending and manage payments. The app has exclusive offers too.Some credit cards offer reward or frequent flyer points, cashbacks and fraud protection. The more perks a card has, the higher the annual fee.

What are the benefits of Afterpay over a credit card?

  • It's easier to sign up for Afterpay. There's no credit check and you can set up an account quickly. You just need to be 18 or older, provide some ID and an Australian bank account or card.
  • It can be cheap. If you pay off the items you purchase on time you can avoid being charged a late fee. While you can also avoid interest charges with a credit card, most cards have an annual fee.
  • Simple to manage. Afterpay's app lets you manage your shopping, spending and repayments. Which is a good thing, although it can make it easy to spend more than you need.

What are the downsides of Afterpay?

Afterpay is designed to get you spending. It's really there for people who can't afford an item right now. If you don't have impulse control, it's a free money machine: until the late fees kick in.

This is also true of a credit card, though credit cards are subject to the full, unmodified responsible lending rules. So if you're using Afterpay you need to be careful and avoid the temptation to overspend.

Can Afterpay hurt my credit score?

According to the National Debt Helpline, "Having multiple Buy Now Pay Later (BNPL) applications and accounts on your credit report can negatively affect your credit report." This is especially true if you have missed some payments.

What are the benefits of cards over Afterpay?

  • Credit cards offer way more spending flexibility. Afterpay is typically used for retail and online purchases. You can use a credit card for almost anything (but don't use it for ATM cash withdrawals or gambling).
  • Perks, points and protection. Many credit cards offer reward or frequent flyer points on your spending (in exchange for an annual fee). You can use these points for reward flights, cashback and more. Credit cards also offer fraud and purchase protection, making it easier to reverse charges from dodgy merchants.
  • Responsible lending. Credit card companies are heavily regulated and have obligations not to give customers more credit than they can afford to repay. Since 10 June 2025 BNPL providers have had responsible lending obligations too, though theirs are a modified version. In theory, this protects card users.

But credit cards come with risks too

Everyone knows a story of someone getting in trouble with a credit card. In many ways they're the original buy now pay later service.

The problem with a credit card is you can spend and then pay it back very slowly. And you incur interest charges and annual fees that add up over time.

There's also the same temptation to overspend that comes with Afterpay.

Getting a credit card versus signing up for Afterpay

  • Buy now pay later. With most buy now pay later plans, you can set up your account online in a few minutes. Some plans are also available when you're shopping in a store. You'll need to be at least 18 years of age and have an Australian bank account or debit/credit card.
  • Credit cards. You need to fill in an online application that asks for a lot more details than buy now pay later plans. You need a good credit score, be 18 or over, have regular income and provide details of your income, assets, debts and regular expenses (this helps show you'll be able to meet payment requirements).
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Our expert says

"Afterpay is a great way to spread a purchase over time. While there is no interest, there are late fees. Credit cards, however, offer better value back on monthly spending if you are confident you can pay your balance off every month."

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Head of Consumer Research

How much does it cost?

Buy now pay later

Most buy now pay later plans don't cost anything when you sign up and are free to use if you make payments on time.

Some buy now pay later plans do charge a small monthly fee of around $4-$8, but Afterpay doesn't.

Fees

If you miss a payment, Afterpay charges a late payment fee. This fee never exceeds 25% of the purchase price or $68 (whichever of the two is smaller).

Credit cards

Traditional credit cards have annual fees that range from $0 to $400 or more. Interest rates are the other major cost to watch out for, with ongoing rates that range from 8.99% p.a. to 24.99% p.a. You can also get cards that offer introductory 0% interest periods.

There is an exception: If you get a no interest monthly fee card, you won't pay any interest on purchases. But when you use the card, you'll pay a monthly fee that is typically between $10 and $22, depending on your credit limit.

Example: Paying off a purchase with Afterpay vs a credit card

You purchase a $1,000 item via Afterpay. You pay it off in 4 instalments of $250. If you make these payments, then you won't pay more than $1,000.

But let's say you miss a payment. You'll get charged a $10 fee. If you don't make the payment within 7 days you'll get charged another $7. Assuming you make the payment after that, you're charged $17 total.

Now let's say you buy the same $1,000 item with a low rate credit card (8%) that offers 55 days interest free.

Assuming you've previously paid off your balance in full, you won't get charged interest on this purchase until 55 days after the statement period started. If you pay it off before then you pay nothing.

But if you don't pay it off, you'll get charged interest at a rate of 8%. Assuming you take 3 months to pay that $1,000 off, you'd end up paying just over $13 in interest.

But that's not including the cost of the card's annual fee.

If you want to look at other repayment options and costs, you can use Finder's credit card repayment calculator.

Watch: Afterpay vs Credit cards: Which is better?

3:50

Other key differences between BNPL plans and credit cards

These details might not be your first priority, but they are worth weighing up when you're trying to decide if a credit card or buy now pay later is the better option.

🔎 Credit check

When you apply for a credit card, the bank or provider will check your credit history. This check is listed on your credit report whether you're approved or not. That's why it's not ideal to apply for too many credit cards in a short amount of time.

In comparison, there is no credit check when you sign up for Afterpay. Other buy now pay later plans do run credit checks or say that they "may" in some cases – so it's worth finding out before you sign up for one.

Keep in mind that a credit check isn't necessarily good or bad – but having a lot of checks and not much else usually won't be seen in a positive light.

🗂 Building credit history

If you want to buy a home in the future or think you'll want a loan for something else, your credit history will affect your chance of approval.

Most buy now pay later plans don't add to your credit history or your credit score at all, which means they do nothing for your future borrowing power. All credit cards add to your credit history and credit score.

So if you get a credit card and meet the repayment requirements, these details will be recorded on your credit report and can help improve your credit score – as well as your potential to get other loans and accounts in the future.

The flipside is that if you don't meet the card's repayment requirements, it could hurt your credit score. This won't happen with, say, Afterpay – although you may need to include details of buy now pay later in the financial section of a loan anyway.

✈️ Rewards

If you want to get something back for your spending, keep in mind that most buy now pay later plans don't offer their own rewards programs.

An exception is Klarna, which has a rewards club that offers 1 vibe point per $1 spent, which you can redeem for Flybuys points, gift cards or other rewards. But at the moment, the main way you could get points or other perks when you use BNPL is to stick with stores that have their own loyalty programs (such as Myer or David Jones).

Credit cards offer much more variety (and competition), with cards that earn points for travel and shopping, as well as cashback or gift cards.

💳 Rewards hack for Afterpay

If you link a rewards credit card to Afterpay, you can earn points for your fortnightly payments. Just keep in mind that you'll then need to pay off your credit card. This guide gives you details of how it works.

🛍 Purchase value and number of accounts

There are more than 12 million credit cards in Australia. Finder analysis tracks the current card numbers and total purchase spend as the Reserve Bank publishes them.

According to the Reserve Bank of Australia, publicly available data for buy now pay later services showed that there were around 6.14 million "active" accounts and $11.26 billion of transactions made in 2020.

🔏 Regulation

Regulation helps protect you from unfair and unreasonable costs or situations, giving you a clear way to make complaints and get support if something goes wrong.

Buy now pay later used to have less regulation than credit cards, but that changed in 2025. The BNPL code of practice came into effect on 1 March 2021, and self-regulation ended on 10 June 2025, when BNPL products became regulated as low cost credit contracts under the National Consumer Credit Protection Act.

BNPL providers must now hold an Australian credit licence, be a member of AFCA and meet modified responsible lending obligations. Credit cards remain subject to the full Australian consumer credit laws and to responsible lending obligations that have not been modified.

If you're still deciding between buy now pay later and a credit card, you can learn more about Afterpay and other buy now pay later brands, find out how the interest-free period of up to 55 days works on credit cards or look at the costs and spending options you get with a no interest monthly fee credit card.

Sources

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Senior Money Editor
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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise
Richard has written 756 Finder guides across topics including:
  • Home loans
  • Credit cards
  • Personal finance
  • Money-saving tips
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