BNPLs vs Credit Cards vs Personal Loans: Pick the right choice as per your needs

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8 mins read

Published: 8 June 2022

Updated: 20 September 2023

Lifestyle and consumer preferences have seen a huge change in recent years. Especially after the outbreak of COVID-19, new age consumers, particularly millennials increasingly look for micro-credit services. They search for credit solutions that are easy to apply for, can be obtained without much hassle, and can help them in managing current and occasional expenses. This has increased the demand for several types of credit services but the top among them is Buy Now Pay Later (BNPL) services. BNPL is different from credit cards and personal loan facilities offered by different banks and other financial institutions.

What is buy now pay later


Buy now pay later in India is a financial service that enables you to pay later for

your shopping expenses. Through this, you can avail of small loan amounts to be

repaid in a few days. The best thing about BNPL is you are not required to pay any charges. Companies offering this service include fintech companies, lending start-ups, banks, and other financial institutions.


How does buy now pay later work


The overall features associated with BNPL facilities remain the same but they might differ slightly from one lender to another one. Broadly it is a facility to buy now

and pay after a few days as the service provider permits you to do. 


Through this facility, you can avail yourself even a small amount of expenses like Rs 2,000 to Rs 5,000. And for this either you can choose your favorite e-commerce platform or your desired bank. BNPL facility is available for even those consumers who fail to maintain a decent credit score.


BNPLs are easy to get. There are many online platforms where this facility is offered. You simply apply for it and you will get it without much hassle. To leverage the growing demand for BNPLS, many merchants and loan providers have joined hands to offer this facility and make it widely usable. In recent days you must have seen some eye-catching buy now pay later ads which promote several schemes covering your small expenses to big spending like movie tickets, mobile purchases, groceries, coolers and cars, almost everything you can avail yourself through BNPL schemes.


BNPL vs credit card: Which one is better

BNPLs cannot match the facilities and features available with Credit cards. BNPLs are confined to partnering merchants but credit cards have global acceptance. You can use them online as well as offline. BNPL service providers are continuously expanding their reach by connecting with more and more merchants but still they have limited scope.

Credit cards let you spend more and save more. Through varieties of transactions of different spend amounts, you can avail rewards and cashback. You can fulfill your lifestyle needs more easily with credit cards which is not possible with BNPLs. Credit cards also offer you zero-cost EMIs to help you plan even big spending goals. You also get higher spending limits in credit cards but sometimes due to stringent terms and conditions you face difficulty in spending up to the maximum limit.

Despite being so useful, credit cards have their own limitations. They are chargeable. You have to pay an annual fee to avail this facility. But this is not the case with BNPL. You are not required to pay any processing fee, annual maintenance charge, or any other renewal cost.

BNPL services do not levy any interest charges on you but if you fail to pay a particular credit card bill within the due date, you are liable to pay late payment fees along with the interest on that.


BNPL vs Personal Loan: Which one to prefer

Personal loans have all-purpose financing options with much higher credit ceilings in comparison to BNPL services. BNPLs are generally not chargeable but steep charges are applied on personal loans. BNPLs are offered with a revolving credit facility whereas no such facilities are available with one-time personal loans.

With cutting edge processes, the borrower's creditworthiness is checked while offering BNPL services and so it takes not more than a few minutes to offer it. Whereas in case of personal loans many factors are considered such as a customer’s age, income, profession, credit score etc. While checking all these parameters, sometimes it takes a few months to sanction a personal loan. The choice of personal loan and BNPL varies according to one’s requirements, eligibility, and repayment capability.   


Credit Cards vs. Personal Loans

Credit cards as well as personal loans are disbursed with similar kinds of credit guidelines. Through both means, you can avail cash at a predetermined rate of interest. Several stringent rules and regulations are applied whether credit cards are issued or personal loans are granted. Failing to meet any of the conditions, drastically impacts your credit score which further deteriorates the chances of getting any credit card or personal loan in the future.  

Despite being similar in nature and having several common attributes, credit cards and personal loans are different in many ways. Both are known for distinctive payment conditions and long-term balances. In a personal loan, a borrower gets a lump sum amount directly in the bank account which he is supposed to pay in a fixed period at a certain interest rate.


Credit cards appear a better option as they come with many attractive features like higher credit limit and worldwide acceptance. But annual fees, late payment costs and interest charged on that may give a jolt to your entire spending plans.  Unlike credit cards, BNPL services provide you smaller, simpler and easy to use credit facilities at the merchant partners. BNPLs are an ideal option for those who seek short-term micro-credit facilities. If you are not qualified to own a credit card, BNPL is ideal for you. Personal loans are required in case of emergency situations when a large sum of money is needed to fulfil some major financial goals.

BNPLs, Credit cards, and personal loans all have their own pros and cons. They must be picked depending on an individual’s needs and priorities.  

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