A big expense is coming: should you save, use a credit card, BNPL or take a personal loan?

Key points

• Whether the expense is essential, and whether the date can move, changes the answer more than any product feature does.
• Paying from savings costs nothing extra and leaves you with a smaller buffer. Delaying and saving first costs nothing except the wait, and it's usually the cheapest option whenever the date is yours to set.
• Buy now pay later (Afterpay, ZipPay) charges fees rather than an interest rate, and splits the cost across your next few pay cycles.
• A credit card costs nothing extra when the balance is cleared inside the interest-free period, and around 20.99% (illustrative) on whatever is left after it. A personal loan has a fixed rate, a fixed term and an end date, with fees, which suits a larger amount you want on a schedule you can plan around.
• Before taking on a new repayment, look at what's already scheduled: your existing repayments, your buffer, and what the next two pay cycles actually look like.

The car needs $1,800 of work. Or the fridge has stopped, the school year starts in three weeks, or the flights have to be booked by Friday. You probably know roughly what it costs and when it has to happen, so what's being decided isn't whether to spend the money – it's which way of paying for it leaves you in the best position afterwards. That's a different question from which way is easiest today.

We're not here to tell you which one to choose. Depending on the amount, the timing and what you're already paying each cycle, any of them can be the right call, including the one where you don't buy it yet.

Start with two questions

Is it essential, and does it have to happen now?

Essential means going without causes real problems: a car you need for work, a fridge that's stopped, a repair that keeps the house liveable, treatment you need. If it's essential, the question is how to pay for it, not whether to have it. Urgent is separate, and means the date isn't yours to move.

When it's both, the options narrow, because the cheapest one (time) isn't available and the decision becomes what you can do this week. The comparison below still matters at that point, because the remaining options cost very different amounts once the expense is behind you.

Wanted and flexible opens the whole range, and the cheapest option in that range is almost always waiting. If the fridge is old and noisy rather than dead, those weeks are worth more than any rate you could negotiate. This guide isn't going to argue with what you spend your money on, however a date you control is the one thing that reliably lowers what the expense costs you.

The awkward ones sit in between: essential with a movable date, like tyres that will need doing in a few months, or wanted with a fixed one, like a wedding you've been invited to. And some big costs were never surprises, because they arrive on dates you've known all year (car rego, insurance renewals, school fees), and planning for those has its own place to be worked through properly.

The four ways to pay, compared

Below is the comparison, with the two versions of paying from savings (now, or after a delay) shown separately.

Paying from savings is the cheapest way to pay for anything, and the cost that doesn't appear in the table is the buffer. Spending $1,800 of a $2,500 buffer leaves $700 between you and the next unplanned expense, which may be fine, and it's worth knowing beforehand.

Buy now pay later works differently from the other two credit options, because most plans don't charge an interest rate at all. What they charge is fees, usually a late fee when an instalment misses and on some accounts a monthly fee, and the amount comes out of your next few pay cycles regardless of how those weeks look. Since 10 June 2025, buy now pay later has been regulated as credit in Australia under the National Credit Act, so providers hold an Australian credit licence, are members of the Australian Financial Complaints Authority, and have responsible lending and hardship obligations. Missed instalments can also be reported in ways that affect your credit, and practices differ between providers.

A credit card can be either the cheapest option here or the most expensive, and what decides it is whether the balance is cleared inside the interest-free period. Interest-free days apply only when you pay the closing balance in full by the due date, and a balance carried past it accrues interest at the purchase rate, around 20.99% (illustrative) on many Australian credit cards. On $1,800 that's roughly $31 a month, and on most credit cards new purchases start accruing interest too until the account is paid in full again. So the test is whether the whole amount can be cleared by the due date on the pays you'll actually have. How credit card interest is calculated has its own explainer.

With a personal loan you're paying for certainty: a fixed rate, a fixed repayment, a set number of months and an end date, with an establishment fee and sometimes a monthly fee to allow for. It tends to suit larger amounts that were never going to fit into the next couple of pay cycles, and it gives you a schedule you can plan around. What it costs depends on the rate you're offered and the term you take, and a longer term lowers the repayment while it may cost more in total.

The reusable-credit column is easy to skip past. A loan closes when it's paid off, while a credit card limit and a buy now pay later account stay available afterwards, so if your balances have crept back up after being paid down before, that belongs in the comparison alongside the rate. Some people also knowingly pay more for certainty or timing, taking the fixed loan repayment over the credit card they might clear, and that's a reasonable trade when it's made with the cost in view.

What does urgency actually change?

It removes the cheapest option, which is time (it doesn't remove the comparison, and even at short notice the options still differ in what they cost you afterwards).

When something essential has to be paid for this week and the money isn't there, the first call often isn't a credit provider at all. Electricity, gas, water, councils and phone providers all offer payment plans, and hardship arrangements are available when you're behind or about to be. Hospitals, dentists and mechanics often have instalment arrangements too, usually without a credit application. What they'll accept changes the size of the gap you're trying to fund.

If the expense is essential and urgent, ask the provider about a payment plan before you look at new credit. For essential services and medical bills, that's often the first call, and it may cost nothing.

Whatever gap is left then goes through the same comparison, on a shorter list.

Check what's already running first

A new repayment doesn't arrive into an empty week. Before committing to one, the first step is looking at what's already scheduled: the loan repayments, credit card minimums and buy now pay later instalments due over the next two pay cycles, and whether your buffer is intact.

If you've been building an emergency buffer while paying off debt, the order in that guide doesn't change here. Minimum repayments come first, then the buffer, and a new commitment for this expense sits after those rather than in front of them. Spending the buffer on the expense is still an option, it's just one to make deliberately.

Pro tip: Connecting your accounts in WeMoney shows the repayments already scheduled against your next couple of pays, so you can see what room there is before you commit to another one.

Sometimes that view shows this expense isn't the first decision to make. Where several existing repayments (credit cards, loans and instalment plans, each on different days) are already consuming the capacity, reducing or reorganising those debts may be worth working through before adding another repayment rather than after. That's a separate question from how you pay for the thing in front of you, and it has its own place to be worked through properly.

Once your accounts are connected, the WeMoney app keeps that view in one place. Which way you pay is still yours to decide, and it's a better decision made with the next two pay cycles in front of you than at the counter with a quote in your hand.

Sources

• Moneysmart: Buy now pay later services
• Moneysmart: Personal loans
• Moneysmart: Credit cards

This article provides general information only. It does not take your personal circumstances into account and is not financial, credit or legal advice. Consider your own situation and seek advice from a suitably qualified professional if you need it.