Hyderabad: Festival season has arrived and fancy offers are readied to attract buyers. Already, e-Commerce giants have announced big discounts and consumers are weighing their options. Unlike in the last two years, festival purchases are expected to touch a new high. In this backdrop, Credits Cards and Buy Now Pay Later (BNPL) are two options for consumers. Let's check out which one is more beneficial among these two.
The new borrowers have been deprived of credit scores and Credit Cards. Obviously, Fintech companies target such borrowers and enable them with the BNPL options. Buying something immediately without cash on hand and then paying back in instalments is BNPL in a nutshell. The loan amount is pre-fixed in the app. Thereafter, you can buy something within the specified loan limit. The bill has to be settled in 15-45 days' time and a delay in payment by even one day could attract a penalty. Eventually, it will also affect your credit score.
Also read: RBI proposes to link credit cards to UPI platform
Usually, banks issue credit cards to employees with strong credit scores. The borrower will get 45-50 days time to repay the amount. A maximum of 45% annual interest will be charged in case of any delay. As we said before, companies offering BNPL do not factor in the borrower's credit scores. Hence, it has been sought-after by potential borrowers. Nonetheless, credit score gets dented on delayed payments and quite difficult to restore it.
Credit Cards have a minimum payment option. Banks will charge late fees if the amount is not remitted on time. There is also a possibility to convert larger bills into EMIs. Whereas, BNPL doesn't boast of such an option. It is better to look into your financial position before choosing between these two. Expensive items could be brought under credit cards and paid back in instalments. No such flexibility in BNPL. If you want to buy something now and pay it back in a short period of time, then the Buy Now Pay Later is the best bet.
