At first glance, a “buy now, pay later” plan’s promise of no interest or upfront fees can seem more appealing than a credit card’s terms. Dividing a transaction into, say, a pay-in-four installment plan sounds straightforward and manageable.
Unlike credit cards, though, these plans lack certain consumer protections and are sometimes unpredictable. In this way, credit cards can be superior to pay-in-four buy now pay later plans, making it easier to manage payments, dispute transactions, get refunds, establish credit or access certain debt-payoff options.
Here are some cases in which a credit card can come out ahead:
1. Credit Reporting
Credit card issuers typically report on-time payments to the three major credit bureaus—Equifax, Experian and TransUnion—which can help you establish a credit history. That’s not always the case with buy now pay later companies. Depending on the lender and the plan, you might only see an account reported to the credit bureaus if it is sent to collections after you default on a loan—and that kind of blemish can stay on your credit report for several years….