Nowadays, many payment options are available. With a credit card, you can spend now and pay later. Similarly, there is the BNPL (Buy Now, Pay Later) option, which allows you to buy today and pay later. Do you know about this option? Let’s understand in detail which option is better for the Indian middle-class People.
Similar but Different
You may have seen options like Amazon Pay Later or Facebook Pay Later, where customers are not required to pay immediately. They get time to make payments, just like a credit card. Although both options work similarly, there are some key differences.
Difference Between BNPL and Credit Card
It is important to understand the difference between these two options so that you can choose the one that suits your needs. In both cases, customers get credit to make purchases, but their structure and usage are different.
With the ‘Buy Now, Pay Later’ (BNPL) option, customers can repay before the due date as well. A credit card also provides a spending limit and offers various discounts and reward points.
Which Option is Easier to Use?
Both options allow customers to shop on credit. However, applying for BNPL is much easier compared to a credit card.
For BNPL, a simple KYC process is required, whereas getting a credit card involves a more complex process. Banks or credit card companies check factors like the customer’s CIBIL score and banking history before approving a credit card. But these checks are not required for BNPL.
Which Option Has More Charges?
Credit cards come with annual fees and processing charges, while BNPL does not have such charges.
Credit cards also require a minimum yearly spend. If you do not meet the required spending limit, you may have to pay extra charges. However, BNPL has no such spending limit, and customers do not need to pay extra fees if they do not use the service.
Interest rates for BNPL are also usually lower than those for credit cards.
Which is Better for Big Purchases?
Credit cards are a better option for big purchases, as they offer higher credit limits and better cashback or rewards.
Which Option Offers More Rewards?
Credit cards provide attractive cashback, reward points, and special discounts from partner brands. In contrast, BNPL options usually do not offer such benefits.
How to Choose the Right Option?
The best option depends on your needs. If you shop online frequently, a credit card may be the better choice due to its reward points and offers. However, if you make occasional purchases, BNPL can be a more convenient option.