BNPL vs Credit Card: Which One Is a Better Option?

Updated on: 5 Dec 2024

Every time you are in the market to buy something, you will find a better and more convenient way to pay for it. Buy-now-pay-later options and credit cards help you shop without hurting your wallet or monthly budget, especially if you plan to make a significant purchase. As such, knowing their features helps you to make an informed decision.

What is Buy Now, Pay Later (BNPL)?

BNPL cards offer credit facilities similar to an instalment loan, which you can use to shop first and pay later. You repay the amount you have spent via EMIs in the subsequent months. Simply put, you can buy anything with BNPL to settle the billing amount with pre-approved credit.

Most platforms, including third-party financial companies, are now offering a BNPL facility. Some of them are:

Amazon Pay Later
Flipkart Pay Later
ICICI Pay later
HDFC Pay Later
PayTM Postpaid
LazyPay
Ola Money Postpaid
ZestMoney
Simpl

What is a Credit Card?

A credit card is another great way to shop when you don’t have funds immediately available without affecting your savings much. Paying for a huge purchase in one go can exceed your monthly budget. Using a credit card can help you pay for the product in monthly instalments via credit card EMIs.

Today, almost every financial institution offers credit cards. To get one, you need to have a good credit score and positive financial health. It also offers various offers and deals, allowing you to save more. Depending on your credit card issuer, a credit card may come with additional joining and maintenance charges.

BNPL vs Credit Cards

Here are some points to note that will help you choose the best payment option with easy instalments.

Topics	Credit Cards	BNPL Cards
Simplicity and Safety	1. Easily to convert bills into EMIs on the mobile app 2. Online account 3. Prompt customer care, depending on the financial company 4. Interest-free for 45-50 days	1. May require documents 2. Depends on the prior relationship with the merchant/issuer 3. Helps you get pre-approved credit if you qualify
Ease of Access	A good credit score and income are essential unless it is a secured card which offers guaranteed approval	Comes with no hard and fast eligibility measures, making it more inclusive
One-time Charges	Nil to ₹2,500 or more as a joining fee, depending on the financial company	It 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

Why to Choose BNPL

If you have a poor credit score, you can choose a BNPL facility to manage your purchases without a credit card. Note that you may require a credit score of over 750 to get your credit card. However, BNPL allows you to build your credit score. All you need to do is to repay your credit on time and continue good repayment behaviour.

Moreover, 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 next most exciting part of a BNPL facility is its low or zero interest rates.

Why to Choose a Credit Card

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 for selected merchants and e-commerce sites.

While credit card interest rates are higher than a BNPL facility, it more than makes up for it with added benefits like:

Cashback
Reward points
Discounts
Travel benefits
Insurance covers

In some cases, credit card EMIs may also be interest-free, but this depends on the merchant.

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 your 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!

FAQs on BNPL and Credit Cards

Is BNPL better than credit cards?

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.

Can you use BNPL with a credit card?

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.

Who is eligible for BNPL?

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.

Is BNPL like a credit card?

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.

Who is eligible to use BNPL services compared to a credit card?

Credit cards are meant for salaried individuals with good credit scores. However, there are no such limitations for BNPL cards. If the person has these eligibility criteria, then they can obtain a BNPL card.