Buy Now, Pay Later (BNPL), the latest comer in credit, has become popular because it allows immediate access to credit even for small purchases and usually without having to go through documents or documents.
Credit cards, EMI cards and BNPL products have many common features and some differ. Understand the nuances of each to make an informed choice and get the most out of the different facilities they offer.
Interest-free period: To date, BNPL offers the longest interest-free period of up to three months. But not all offer long interest-free periods, which can be as short as 15 days. By comparison, credit cards typically offer a 45-day interest-free period. EMI cards allow you to settle your credit through EMI over a fixed period of time, which varies. This is also known as the no-cost EMI option offered by most physical stores.
Offers: Credit cards offer rewards points that can be used for future purchases, subject to card policy. Some card issuers also allow their users to redeem their accumulated reward points for payment of their credit card bills. However, the reward points are usually revoked if you opt for the credit card EMI facility.
Carefully compare the different cashback or discount offers available on goods or services to be purchased through BNPL programs and credit or debit cards. Opt for the mode that costs the least interest and/or receives the highest discount/cashback.
Availablity: Credit cards are widely accepted for both offline and online purchases. EMI cards are mainly used on durable consumer goods. However, installation, both online and offline, is only available from certain merchants. BNPL is also currently offered by some online and offline merchants.
There are many choices available in low cost short term loans. Lack of credit history is no longer a deterrent to small loans. However, each of the products described above (credit cards, EMI cards and BNPL) is a loan and should be treated as such.
The way to make the most of it is to take out credit based on your ability to repay. Avoid impulse purchases and repay on time.