Among flexible payment facilities, Buy Now Pay Later (BNPL) and credit cards are popular in India. While BNPL is convenient for short-term usage with instant approval, credit cards provide extended credit access along with rewards, cashback, and other benefits.
Knowing the difference between buy now, pay later and credit card will help make educated choices. One of these may suit you better than the other, depending on how you spend money, repay, and what you want to achieve financially. So, before you pick what is right for you, remember to compare the interest rates, repayment terms, and fees.
Buy Now Pay Later is a payment option that lets you purchase items instantly and pay for them later in small, interest-free instalments. It is commonly offered at online and in-store checkouts for purchases such as laptops, ACs, and more.
It is popular among modern consumers due to its easy approval process and minimal credit checks. Buy and pay later works like an instalment loan. It allows you to spend a set amount to buy what you need, and repay in EMIs over time.
While it is convenient and helps manage budgets, it also comes with risks like overspending, limited usage, and possible late fees.
BNPL and credit cards are two popular ways to manage payments, but they work differently. BNPL lets you split purchases into fixed instalments. Credit cards offer a revolving credit line, wider acceptance, and added perks.
Choosing between them depends on your spending habits, repayment ability, credit needs, and how often you shop. Here are the differences between Buy Now Pay Later and credit cards:
| Parameters | Buy Now Pay Later | Credit Cards |
|---|---|---|
| Definition | You pay in fixed instalments over time | Offers a revolving credit line for ongoing purchases |
| Simplicity and Safety | May need documents, based on the relationship with the merchant | Easy to use with apps and strong customer support, and interest-free up to 45–50 days |
| Ease of Access | Easy approval with minimal or no credit checks | Needs a good credit score, income, or a secured card |
| Credit Check | Often skipped or soft check only | Mostly mandatory |
| Repayment Flexibility | Fixed EMIs make budgeting simple | Flexible monthly payments, which can be made in full or in part |
| Acceptance | Limited to certain merchants or apps | Accepted globally, online and offline |
| Interest Charges | Interest-free EMIs for specific time frames | Applicable interest charges on unpaid balances and outstanding |
| One-time Charges | May include processing or down payment fees | Joining fee varies, can be nil or up to a specific amount |
| Credit Limit | Generally lower or capped | Higher limits based on your creditworthiness |
| Credit Building | Helps build a credit score with timely repayment | Strong credit impact, which can be positive or negative |
| Rewards and Benefits | Minimal or none | Cashback, discounts, travel benefits, or insurance |
| Budget Management | Good for short-term budgeting and smaller purchases | Better for frequent use and flexible spending |
| Recommended For | Students, new users, buyers with limited credit history | Salaried professionals, frequent shoppers, or business owners |
BNPL and credit cards can be useful financial tools when used wisely. To avoid falling into debt or damaging your credit score, it is important to follow a few key practices. Here are some helpful tips:
Can I build my credit score using a buy now, pay later?
Yes, you can build your credit score with responsible BNPL usage and repayments.
Are there hidden fees or interest charges for BNPL?
Yes. BNPL can have hidden fees like processing fees, late fees, and interest on overdue payments. Some charge interest annually or fees per missed instalment.
What happens if I miss a payment on a BNPL purchase?
If you miss a BNPL payment, your account may be frozen, and the debt could be handed over to a debt collector. It can also hurt your credit score if reported.
