Statement Day
Statement Day

Credit cards are complicated

The growth of Buy Now Pay Later has been driven by the demand for a simpler product. But is it any better?

Interest free periods on credit cards are conditional

Purchases are only interest free on credit cards if you pay your balance in full, on time, each month.

If you pay any part of your balance after the due date, interest is charged on all your purchases/daily balances for the current AND following month.

There’s no way to borrow on a credit card for a small amount or a short period of time. It’s all or nothing, which, whilst not being totally unreasonable, isn’t exactly customer friendly.

Doesn’t Buy Now Pay Later fix this?

Instalment plans offered by BNPL providers are unconditionally interest free. However it may not be the answer to all your credit card problems:

  • You can’t borrow on BNPL: If you can’t make your full payment on a credit card, you pay interest. If you can’t make your full payment on BNPL, you’re in default.

  • BNPL interest free terms are worse than credit cards: The interest free terms on a credit card are on average 40 days. The interest free terms on BNPL are on average 30 days.

  • You can’t use BNPL everywhere: BNPL is dependent on a relationship existing between the BNPL provider and the retailer.

  • BNPL is unregulated: You don’t have the same protections with BNPL that you do with credit cards.

Some Credit Card Tips

To give yourself the most effective interest free period on your credit card, you should ask your provider to change your due date such that it is no earlier than your pay day. You should also save any big purchases until your next statement day if it is close (this is usually about a week after your due date).

Shouldn’t there be another way?

Buy Now Pay Later is a simpler product than a credit card, and that’s great.

But we think Statement Day is a better product.

Interested? Please get in touch