How to budget with credit cards and buy now, pay later options

NEW YORK (WABC) -- With rising inflation, many consumers can struggle to pay for essentials like bills and food, and for those on a tight budget, turning to alternative payment methods is the way to go.

Splitting up payments and turning to credit can buy time between paychecks, but you need to be smart about both.

According to the Consumer Financial Protection Bureau, use of "buy now, pay later" services has been on the rise.

According to the agency, in 2019 consumers took out $2 billion in BNPL loans. In 2025, it boomed to $70 billion.

Lending Tree's Chief Consumer Finance Analyst Matt Schulz says it's a sign of the times.

"It's a strange time because people are still clearly struggling with inflation," he said.

He says buy now pay later started as a way for shoppers to purchase big ticket items a bit out of budget, in four separate payments... but that's changing.

"In our latest survey, we found that more people are paying late, more people are taking out multiple loans at one time, and more people are using these loans to pay for things like groceries," Schulz said. "That's really not a sign of a healthy consumer."

When using BNPL, be cautious. Missed payments can lead to late fees. Never link your credit card to the platform and limit the number of BNPL loans you have at once.

When it comes to credit, make every swipe matter. Those prices at the pump can pay you back.

"If you spend a lot of money on gas, like so many people do these days, a gas rewards card can be a good idea," Schulz said.

Do your own research to find a card that best suits your lifestyle.

"There's no one-size-fits-all for what the best rewards credit card is, it's really about, kind of what your goals are and how you spend," Schulz said. "I tend to recommend just a simple 2% cash back card for most people, like Wells Fargo Active Cash or Citi Double Cash. Those give you 2% back on everything you buy."

Any time you take on new credit, try to stay out of the red.

"It's about paying your bills on time, every single time, keeping your balances as low as possible and not applying for too much credit too often," he said. "If you do those three things, lather, rinse, repeat over years, your credit's going to be just fine."

Right now, many credit scores are taking a hit. If you're looking to improve it, take these steps:

Update your income with your credit card

If you make more than when you opened the account, this could trigger a credit limit increase. And if you don't utilize it, that "available credit" will increase your credit score.

Call your credit card and ask for an interest rate decrease

Schulz says LendingTree's research shows that about 80% of the time, you'll get a rate drop, and it doesn't cost anything to ask.

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