Credit cards often come with additional benefits such as rewards and cashback offers, which are not typically promoted by BNPL options.
Buy Now Pay Later (BNPL) is a popular financing option that allows buyers to make purchases with the flexibility of paying off the amount at a later date, often with an interest-free period. Over the past few years, this scheme has gained significant traction with e-commerce companies, banks and fintech players offering tempting BNPL offers to customers.
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Meanwhile, credit cards continue to have their own market, with numerous customers availing of various services provided by them. While both options have their merits, it is essential for customers to make cost-effective decisions when it comes to making purchases. Let’s delve into the similarities and differences between BNPL and credit cards to determine which might be more beneficial in different aspects.
One primary similarity between BNPL and credit cards is that both offer the option to convert purchases into equated monthly instalments (EMI). Customers can opt for this feature to spread their payment over a few months or even a year, depending on the policies of the respective providers. While credit cards universally offer EMI options, not all BNPL lenders provide this facility. Therefore, if a customer requires EMI for an extended period, it is crucial to compare the rates offered by different providers to make the most beneficial choice.
Another similarity is that when a purchase is made through a credit card, the repayment is typically required within 40-50 days; otherwise, a penalty is charged. On the other hand, BNPL offers the advantage of dividing the bill into three installments, without incurring separate fees. The outstanding amount can be carried forward to the next month, requiring only a mandatory minimum payment. It is essential for customers to consider these aspects while making their decision.
Credit cards often come with additional benefits such as rewards and cashback offers, which are not typically promoted by BNPL options. However, BNPL provides customers with attractive deals that may include interest rates and other charges. Comparing the total cost of financing is essential for making an informed choice between the two options.
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Additionally, credit card users enjoy a credit-free period, while BNPL customers rely on the attractiveness of the deal offered, considering factors like interest rates and other terms. Ultimately, the choice between BNPL and credit cards should be based on the specific services and policies that align with the customer’s needs and preferences.
