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BNPL vs Credit Card: Which One Is a Better Option?
- Updated on: 26 Sep 2024
- Published on: 14 Mar 2024
For a buyer, buy-now-pay-later credit options are constantly evolving. Every time you are in the market to buy something, you will find a better and more convenient way to pay for it. This convenience helps you shop without hurting your wallet or your monthly budget, especially if you have a big-ticket expense.
Whether it is a credit card or a buy now pay later card/digital solution, you can manage your finances efficiently. As such, knowing the difference in their features helps you make an informed decision.
It is a credit facility similar to an instalment loan, using which you can shop and then pay what you have spent via EMIs in the subsequent months. In simpler words, you can buy anything with BNPL to settle the billing amount with pre-approved credit. Thereafter, you can pay it back to your lender in monthly instalments.
Most platforms are now offering a BNPL facility. Some of them are:
You can also use this facility via third-party financial companies at online and offline retailers.
A credit card is another great way to buy things without spending from your savings or paying the full price in one go. Using it, you can spend a certain amount each month and settle the expenses next month. Almost every bank and NBFC offers a credit card, which you can opt for if you have a good credit score and maintain financial health.
A credit card also gives you EMI conversion facilities, using which you can pay a large bill by swiping your card. You can then pay for that amount over a few months in every credit card bill. This facility may come with a processing fee and interest charges, but this depends on the card and the retailer.
Also Read: How to Pay Credit Card Bill Payment?
Here are some points to note that will help you choose the best payment option.
| Particulars | Credit Cards | BNPL |
|---|---|---|
| Simplicity and Safety | Easy to convert bills on the mobile app, online account or by calling customer care before or after payment of a bill | Can be quick or take time and require documents, depending on prior relationship |
| Ease of Access | A good credit score and income is essential unless it is a secured card, which offers guaranteed approval | Has no hard and fast eligibility measures, so may be more inclusive |
| One-time Charges | Nil to ₹2,500 or more as joining fee, depending on the financial company | May require a processing fee and a down payment |
| Interest Charges | Up to 48% | Up to 30% |
| Acceptance | Widely accepted | Limited acceptance based on the retailer and financial institution |
If you have a poor credit score, you can choose a BNPL facility to manage your purchases without a credit card. Note that you require a credit score of over 750 to get your credit card. However, to build a credit score, you need to repay your credit on time in the first place. Due to this paradox, many people are not eligible for cards if they are new to credit.
However, you don’t need a credit score to opt for the BNPL facility. This is where credit cards lose in the battle when comparing BNPL vs credit cards. The most exciting part of a BNPL facility is its low interest rates.
Credit cards are extremely convenient to use and widely accepted, too. With one card, you can make payments in a variety of categories, whereas a BNPL facility is only useful for shopping at select merchants or e-commerce sites.
While the interest rates are higher than a BNPL facility, it more than makes up for it with added benefits like:
Note that both credit cards and BNPL cards have value and can help you make purchases with ease. Overusing either facility can be detrimental to your finances, so always plan your budget and repayment ability. Since credit cards offer more features, you may want to add one to your wallet soon.
In your search for the ideal card, check out the Fibe Axis Bank Credit Card – India’s first numberless credit card! Not only does it safeguard your data, but it also gives you a flat 3% cashback on food orders, entertainment and more, and 1% on other categories.
You can also travel in style with up to 4 free visits to domestic lounges and save more with a 1% waiver on fuel surcharge. What’s more, this credit card comes with zero joining and annual fees. Download the Fibe App to apply for it now!
Comparing the features of credit cards vs BNPL will help you choose the right one for yourself. While BNPL facilities may come with lower interest rates, you can only use them at specific retailers. Credit cards offer a variety of benefits, but the interest rates may be higher. In some cases, you can pay in EMIs at zero interest using both BNPL and credit cards.
Credit cards are very versatile with their services, and yes, you can use them as a buy now, pay later option with the EMI conversion facility. You may need to pay a nominal processing fee and interest rate for this facility.
There are no particular eligibility measures for a BNPL facility, unlike a credit card. That being said, most financial institutions offer this facility to salaried applicants who are above the age of 18 and have basic KYC documents in place, like PAN and Aadhaar cards.
A BNPL facility is limited to giving you the option to purchase something now and pay the bill in monthly instalments. A credit card offers many more features, such as giving you a long grace period to pay bills, having universal acceptance, giving you the option to convert bills into EMIs, offering discounts, and allowing you to earn reward points.
