{"id":36569,"date":"2022-09-06T09:00:56","date_gmt":"2022-09-06T09:00:56","guid":{"rendered":"https:\/\/www.zopa.com\/retail-finance\/retailer-articles\/why-consumers-prefer-bnpl-to-credit-cards\/"},"modified":"2025-03-03T09:46:08","modified_gmt":"2025-03-03T09:46:08","slug":"why-consumers-prefer-bnpl-to-credit-cards","status":"publish","type":"post","link":"https:\/\/www.zopa.com\/retail-finance\/blogs\/why-consumers-prefer-bnpl-to-credit-cards\/","title":{"rendered":"Why consumers prefer BNPL to credit cards"},"content":{"rendered":"

Key highlights:<\/i><\/b><\/p>\n

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  1. \n– Clear distinction between buy now, pay later and the traditional credit card option<\/span><\/i><\/li>\n<\/ol>\n
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    1. \n– Cost of living crisis driving consumers to tighten their budgets, meaning they\u2019re more likely to take on BNPL and interest free credit with retailers who offer them<\/span><\/i><\/li>\n<\/ol>\n
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      1. \n– Consumers and retailers must be careful with BNPL, but DivideBuy\u2019s interest free credit offering provides the perfect solution<\/span><\/i><\/li>\n<\/ol>\n

         <\/p>\n

        As the cost of living crisis worsens, more people than ever are turning to credit as a way to better manage their payments.<\/span><\/p>\n

         <\/p>\n

        Relatively unknown until a few years ago, the buy now, pay later (BNPL) space is\u00a0 <\/span>now worth \u00a310bn to the UK alone<\/span><\/a>. And for many consumers, <\/span>particularly younger generations<\/span><\/a>, it\u2019s now preferred to credit cards.\u00a0<\/span><\/p>\n

         <\/p>\n

        Most will be aware of both these <\/span>credit options <\/span><\/a>, but what\u2019s the difference between the two? And is now an ideal time for your eCommerce site to adopt a <\/span>POS financing option<\/span><\/a>?\u00a0<\/span>\u00a0<\/span><\/p>\n

        <\/h2>\n

         <\/p>\n

        Interest free credit\/BNPL vs credit card – what\u2019s the difference?<\/b><\/h2>\n

         <\/p>\n

        What is a credit card?<\/b><\/p>\n

        A credit card is a form of loan where, rather than coming from the consumer\u2019s bank account, the money spent is borrowed from the provider of the card. Those funds are then paid back over an extended period of time – often up to several years.\u00a0\u00a0<\/span><\/p>\n

         <\/p>\n

        Depending on the provider and the deal selected by the consumer, these may have a period of interest free borrowing. However they normally involve interest being incurred at some point during the card\u2019s lifetime. Repayments begin almost as soon as any money is spent, with fees and a potentially damaged credit score incurred for late or missed repayments.<\/span><\/p>\n

         <\/p>\n

        What is interest free credit?<\/b><\/p>\n

        Interest free credit<\/span><\/a> and BNPL deals are very much as they sound. Rather than paying for the entire product all at once, regular payments are spread out over a predetermined period of time. The length can vary, but it\u2019s generally shorter than its credit card alternative.\u00a0<\/span><\/p>\n

         <\/p>\n

        BNPL and interest free products are aimed at making it easier for consumers to manage their money. Many of these deals, like DivideBuy\u2019s finance solution, are interest free, however offers from other lenders can vary so be sure to read all of the small print before signing up.\u00a0\u00a0<\/span><\/p>\n

         <\/p>\n

        What\u2019s the difference?<\/b><\/p>\n

        BNPL deals are separate credit agreements forged each time the consumer buys a product. Unlike credit cards – which involve a bank, building society or lender – they are agreements solely between lenders offering the deal or product and the customer. They\u2019re also for relatively shorter periods of time (for example, two to twelve months with DivideBuy).\u00a0<\/span><\/p>\n

         <\/p>\n

        Here are three reasons why consumers are choosing interest free credit\/BNPL options over credit cards.<\/span><\/p>\n

         <\/p>\n