Holiday shopping season is in full swing. As you head out to stores or hunt for the perfect stocking stuffer online, what’s the best way to pay for those purchases? Should you use buy now, pay later or a credit card? Our columnist gives her verdict:
Hello and welcome to Financial Face-off, a MarketWatch column where we help you weigh financial decisions. Our columnist will give her verdict. Tell us whether you think she’s right in the comments. And please share your suggestions for future Financial Face-off columns by emailing our columnist at [email protected].
While most shoppers were satisfied with their BNPL experience, about one-third said they ran into problems, according to a Consumer Reports survey. Shoppers reported trouble with returns or refunds; some incurred late fees and overdraft penalties . Other BNPL users became overextended on BNPL loans and couldn’t keep up with their payments, Consumer Reports found.
But there are some points in favor of using credit cards over BNPL. The biggest is that using a credit card helps you build your credit, while BNPL doesn’t. BNPL can be appealing because it’s so easy to get started with but the flip side of that is that it doesn’t help you improve your credit score, Rossman said. “It’s a little bit of the chicken and the egg kind of thing.
Building credit is a key step in improving your long-term financial well-being. Your credit score has ripple effects across your life. It can determine whether you qualify to rent an apartment, as one new member of Congress recently learned. Your credit score decides how big of a mortgage you can get and how cheap or expensive it will be to borrow that money. Credit is also a factor in how much you pay for car loans and home and auto insurance.
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