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Pay On Demand vs Credit Card

There is no such thing as a perfect loan; watch out for fees, repayment flexibility and credit limits.

Given the rising popularity of pay on demand or wage advance services, you may be wondering how it compares to a credit card. There are many differences, including fees, credit limits and suitability. In general, pay on demand has a lower credit limit but doesn’t charge interest, while credit card repayments may be more flexible. 

At a glance

Pay on demand is an app-based loan product. With it, you can access part of your pay before payday. This can be useful when you find yourself short and need funds urgently. Generally, a fee is charged instead of interest. The repayment is either staggered over a period or expected the following payday. There are several types of providers, including non-bank apps that don’t involve your employer. Other options include bank offered services, and employer-offered services. You are essentially borrowing part of your pay cheque before you get paid. 

In contrast, a credit card allows you to borrow money you don’t have, to be repaid over time, often with interest. This can be useful if you don’t have the money to pay for something, or if you don’t want to pay upfront. With credit cards, you have to pay your balance on time to avoid accruing interest. There are different types of credit cards, including no-interest monthly-fee cards.

How do their features compare? 



NAB StraightUp

ANZ Platinum Card


0% interest 

0% interest 

20.99% p.a.

Credit limit

Up to $1,200, although some users may be approved for up to $2,000. 

From $1,000 to $3,000, based on your available credit limit

Minimum credit limit of $6,000 Maximum credit limit can be higher, but is subject to lending criteria and approval


5% flat fee per transaction. No other regular account keeping fees

Monthly fee: $1,000 limit: $10, $2,000 limit: $15, $3,000 limit: $20


Late payment fee




Where to use 


Most everyday shopping and some bill payments

Everyday shopping, some bill payments, cash advance transactions and balance transfers


Instalments across and up to 4 pay cycles, for a maximum of 62 days

Minimum monthly payments, ranging from $35 to $110

2% of the closing balance or $25, whichever is greater

Credit check

No credit check

Credit check is completed and repayments are recorded on your credit report

Credit check is completed and repayments are recorded on your credit report

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How much can I borrow? 

Pay on demand 

This will depend on the service provider. Some providers offer up to 25% of your pay cheque in advance, while others may offer less. You should be able to borrow from $100 up to $1,250. 

How much you can actually borrow will depend on how much you earn. Your credit limit will be calculated based on that.  

Credit cards

Your credit limit will depend on the type of credit card you apply for and your personal circumstances. 

With a traditional credit card, your minimum credit limit will range from $5,000 up to $20,000. This is based on your income, employment status and creditworthiness. 

With no-interest monthly-fee credit cards, the limit ranges from $1,000 to $3,000. This is subject to assessment and approval. 

Ultimately, you will only receive a credit limit you can reasonably afford over a 3-year period.

Bottom line: It really depends on how much you earn and want to borrow. Ultimately both options will only lend a percentage of your pay, although it’s likely you can borrow more with a credit card. 

If you’re looking to make large purchases, you may be better off with a credit card. Keep in mind that interest can add up and you could be dragging your debt before you know it.

If you’re looking for a small burst of emergency funds and can pay it off fast, you may be better off with pay on demand.

How much does it cost? 

Pay on demand

For the most part, providers don’t charge interest. Instead, they charge a flat fee. You can be charged up to 5% of the amount loaned. Others may charge up to $10 per transaction. With employer-offered services, your employer may cover the fees. 

While some apps don’t have late fees, others may charge a late fee. Some apps also apply interest if you don’t repay by the nominated date. 

Credit cards 

With traditional credit cards, you’ll have to account for fees and interest. There may be annual fees ranging from $0 to $400 or more. Interest rates can be high, ranging from 8.99% p.a. to 24.99% p.a. There are also some credit cards that offer 0% interest during the introductory period.

In contrast, a no-interest monthly-fee card doesn’t charge interest. As the name implies though, there is a monthly fee, ranging from $10 to $22. This will depend on your credit limit.

Bottom line: You have to ask yourself what you prefer and what kind of borrower you are. Pay on demand may work out to be cheaper. But if you’re punctual with your bills and want a higher credit limit, you may be able to work the credit card to your advantage. A no-interest monthly-fee card may hit the sweet spot.   

It’s best to account for late fees too. Some pay on demand services may not charge late fees at all. With credit cards, you could be paying high interest if you drag your repayments.

Where can I use it?

Pay on demand

Once the money is in your account, where and how you choose to spend it is up to you. You can move the money around as you wish, using standard payment methods like cash or debit cards to make your payments. 

Credit cards 

You can use credit cards anywhere that accepts card payments. This can include overseas retailers. Most places in Australia accept Visa and Mastercard. Many places also accept American Express. If you want cash, you’ll have to pay a one-off cash advance fee including interest charges. 

Bottom line: This one is a tie, unless you want cash out. In that case, pay on demand doesn’t come with a charge.

How do repayments work?

Pay on demand 

This depends on your service provider. In general, pay on demand has a short loan term. With some lenders, it’s a maximum of 31 days, with others it’s 62 days. You may not be able to split your payments, but some lenders have this option. Your repayments will include the principal amount borrowed plus any fees. It will be automatically deducted from your account. You’ll have to settle your repayments before you can apply for another advance. 

Credit cards

Unlike pay on demand, with credit cards you have the option to make minimum payments each month. It could be a fixed amount as with a no-interest monthly-fee card. You could also opt for an instalment plan and pay equal amounts every month. With traditional credit cards, you could pay around 2-3% of your balance. Your monthly repayments could be anywhere from $35 to $110 or more. You have the flexibility to pay more for some months. Keep in mind that by paying the minimum every month, you could be carrying your credit card debt for months.

Bottom line: Credit cards give you more flexibility when it comes to repayments. You could structure your repayments as you like, and pay the minimum if necessary. In comparison, pay on demand can seem inflexible. You don’t get a long loan term and you may not have a choice in how much you want to pay. That said, you also pay off your debt faster.

How do I sign up?

Pay on demand 

You can download the app from the relevant provider to sign up for the service. The app will be available on the App Store or Google Play Store. You may have to connect the app to your bank account. This helps determine how much you get paid, which is used to calculate your credit limit. The same applies for employer-run services. You can enter your employment details in the app to get started. You’ll need to meet some requirements to qualify, including age, income, citizenship and employment requirements. Most providers don’t perform a credit check. 

Credit cards

To apply for a credit card, you’ll have to fill out an online application and provide the relevant details. Applications are generally quick, and you’ll find out if you’re approved within 60 seconds. You may be conditionally approved, after which you’ll have to submit supporting documents. The documents you’ll need to provide may include identification, income and tax assessments. Some lenders may have a virtual card, allowing for immediate use, but most don’t. You should account for the waiting period, which may take around 5 to 10 days.

Bottom line: Pay on demand may be faster and easier than getting your hands on a credit card. Credit cards involve more documentation and a credit check, not to mention the waiting time.

Other key differences

These may not be a priority, but they’re definitely good to know. 

🔍 Credit check

When it comes to credit checks, credit cards are definitely more stringent. The provider of your credit card will check your credit history. This search will be listed on your credit report regardless of whether you’re approved or not. It’s best to hold off applying for too many credit cards for this reason. 

Pay on demand apps meanwhile often don’t perform a credit check. They rely on your income to determine whether or not you can afford to repay the loan. 

Credit checks aren’t a deal breaker by any means. That said, too many checks will tank your credit score and may be viewed as a red flag by any potential lender. 

🏗 Building credit history

While credit searches may knock off a few points from your credit score, some people use credit cards to help build their scores. This is only the case if it’s done right. If you make your repayments on time and pay more than the minimum, you could build your score. This, in turn, will signal to other lenders that you’re a responsible borrower. You should make it a point to apply for only one card at a time and keep your credit limit low. This is definitely a case for using your card responsibly if you’re getting one. 

✈️ Rewards

One of the appeals of a credit card is the rewards system. You could earn points for travel and shopping, as well as cashback or gift cards. Pay on demand apps don’t have rewards programs. 

🔏 Regulation

Regulations are important. They protect you from predatory lending and sky-high costs. They also ensure there’s a support mechanism if something goes wrong and a way for you to make complaints. Credit cards offer full protection under Australian consumer credit laws. In contrast, pay on demand is less regulated. For the time being, most companies self-regulate. However, there is talk of regulations at a federal level, although it may take a while to implement.  

The verdict: Is pay on demand better than a credit card? 

No credit product is perfect, they all come with limitations. Whether pay on demand is better than a credit card will depend on what you want out of your loan. Here’s what you need to keep in mind:

Pay on demand may be suitable if: 

✅ You need access to funds immediately and don’t have a credit card.

✅ You want a loan for a short term only.

✅ You need emergency funds for a relatively small amount.

✅ You need a loan with capped fees.

What to watch out for: 

Fees. If you’re planning on using pay on demand regularly, you should calculate how much you will be paying in fees for that period. It may seem like a small amount, but fees can add up, and it may work out to be more expensive. 

May create budgeting difficulties. While it may be useful to access your pay in advance, don’t forget that you have to pay for the loan from your upcoming pay. This deduction from your pay may create budgeting problems for the coming month/s, creating financial stress.  

❗Not a long term financial solution. It may be tempting to rely on this service as it’s easy to access and use. If you’re experiencing financial difficulties, this may not be a long term solution. Contact a financial counsellor if you’re experiencing difficulties. 

A credit card may be suitable if: 

✅ You want the option of repaying your loan over a few months or longer, without worrying about late fees.

✅ You’re punctual with your repayments.

✅ You want access to ongoing credit for unexpected costs.

✅ You want to build a good credit history.

What to watch out for:

Interest charges. Don’t forget: You will be charged interest if you don’t make your repayments on time. This can add up and your debt can spiral out of control. Make your repayments on time, try to pay off the debt as fast as you can and only use your card in emergencies.  

Fees. Apart from interest, you also have annual fees to contend with. You will have to pay this fee even if you’re using the credit card sparingly. These costs add up and may make credit cards an expensive option. 

Trigger-happy spending. Revolving credit when you want it, as you want it may lead to unfettered spending. Once you’ve got the card, it may be tempting to pull it out for every season. Keep in mind the costs involved, to make no mention of the debt you’re getting into. Use the card responsibly. 

Signing up for pay on demand or wage advance apps is certainly easier. There is no credit check involved and you get access to funds faster. However, credit cards may come with higher credit limits and more flexible repayment options. 
If you’re still on the fence, you can read more about Beforepay and other pay on demand apps. You can also read more on how interest-free periods on credit cards work, or read more about no-interest monthly-fee credit cards.

More guides on Finder

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  • foundU On-Demand Wages

    foundU On-Demand Wages review, costs and how to apply.

  • Beforepay

    Beforepay is a smart app that allows you to access up to $200 of your wages ahead of your next payday, while simultaneously offering you budgeting solutions.

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