Explainer: What is the difference between Buy Now Pay Later or credit card shopping, know which is the better option
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Buy Now Pay Later VS Credit Card: The use of credit cards in India has increased rapidly in the last few years. In the meantime, the fintech segment (FinTech Segment) in Innovation and R&D (R&D) has also happened a lot. Meanwhile a new concept has come in the market, BNPL (Buy Now Pay Later, It simply means, buy goods or products from the market now and then pay the money after the fixed time. Its card is being made by many companies on the lines of credit card. Sometimes customers are given this opportunity even on e-commerce sites. But BNPL Shopping with is very different from shopping with a credit card. Let us understand what both are.
what is credit card
A credit card is a type of financial instrument that is given to an individual by a financial institution or bank. This instrument allows a person to borrow an amount up to a specified limit, which the person can spend as per his requirement. Credit cards are used by individuals to pay for various purchases, services and expenses. When a person pays for any goods or services using his credit card, he borrows the amount in his credit account. This means that the person borrows the amount of that payment in advance and later deposits that amount into his credit card account.
Credit card bill has to be paid on time
During the use of a credit card, the bank or financial institution expects to return the amount as per a specified time limit. If the person does not pay back that amount within the time limit, then he may have to pay it with interest. Using a credit card, one gets various benefits, such as the facility to borrow money without interest, rewards and cashback bonuses, etc. However, this also means that it is very important for one to use his credit card accurately and carefully so that he does not end up with high interest.
what is boy now pay letter
Through “Buy Now Pay Later” individuals can easily buy products from various businesses or e-commerce platforms and promise to pay them later within a specified period of time. Its main purpose is to give customers an opportunity to buy products or services easily and they do not need other payment options like loans or credit cards. In this way, customers can easily buy the products of their choice, and pay for it by adhering to the repayment schedule and discipline. It is a popular financial service that allows consumers to buy products without having to spend money immediately. Please note that the “Buy Now Pay Later” option may be offered by various merchants and banks, and the features and terms may also vary from institution to institution. You are advised to contact specialized entities or e-commerce portals for more details on Buy Now Pay Later option for your purchases.
How does BNPL card work?
Before using the BNPL Card, one should carefully understand the payment terms, interest rates, and other charges. The main advantage of the BNPL card is that it offers a choice of different payment tenures. The individual chooses the term they wish to repay, such as easy hand payment (Easy Monthly Installments, EMI) or option for some other time period in which they can pay that amount. As soon as the person selects the payment term for his purchase, the person is billed for making regular payments as per that term. Interest and charges may apply on the selected payment term. This interest and charges may vary according to different BNPL cards and institutions. However, at present, interest-free period of two months is given for payment in most of the cards.
How is it different from paying with a credit card?
On paying or purchasing with a credit card, the bank or card issuing institution gives the money immediately to the seller of goods or services. After this, you are given 20 to 50 days time to pay the bill. After this, penalty is imposed on credit card bill payment. The penalty percentage is different for each card. BNPL card gives the facility of dividing the outstanding bill into three instalments. No separate fee has to be paid for this. Carry forward option is given on payment of minimum amount every month. Many companies charge 3 to 4 percent for carry forward. On the other hand, when it comes to credit cards, paying the minimum due proves to be an expensive deal. In their case, interest has to be paid on the remaining amount, which is huge.
There is a big difference in rewards
The card holder gets a huge benefit in the form of reward points for making purchases with a credit card. From buying plane tickets to shopping, getting gift vouchers or booking hotels, things can be done from these reward points. Whereas, customers do not get any special benefit on payment in BNPL card. However, in some cards, one percent cash back is given. At the same time, most of the customers do not get anything on the offer of BNPL by e-commerce companies.
how many days to pay credit card bill
You are given a fixed supply time to clear the credit card bill. This usually happens from 20 to 50 days. Within this time you have to pay the bill amount in full so that you can avoid interest. If the bill is paid after the specified grace period, the company charges interest on the amount of the bill. The rate of interest on credit cards is charged in the form of Annual Percentage Rate (APR). This rate ranges from 14 percent to 40 percent. If you do not pay the bill on time, then the interest on the outstanding limit of your card increases. calculate its interest (Total days from transaction date x Balance x Monthly credit card interest rate x 12 months) / 365 days is based on.
How much penalty will have to be paid on credit card
After making a purchase with a credit card, the card holder is given enough time to return the money to the bank. Even after this, if the payment is made after the due day, bank penalty may apply. If the bill is high, then the amount of penalty will also be high. Similarly, if the bill amount is less then the penalty amount will be less. For example, on State Bank of India’s card, a penalty of Rs 400 is levied on bills ranging from Rs 500 to Rs 1,000. At the same time, a late fee of Rs 750 will have to be paid for expenses ranging from Rs 1,000 to Rs 10,000.
What to do to get a credit card
Contact the bank to get a credit card. Check your credit score before applying for it. A good credit score increases your chances of getting approved for a credit card with better terms and benefits. There are different types of credit cards available with banks, each offering different facilities and benefits. Research and compare various credit card options to find a credit card option that suits your needs and financial situation. You can apply for a credit card online through the issuer’s website or through a paper application in person at a bank branch or other financial institution. While applying for a credit card, you will need to provide certain documents, such as proof of identity, address and income. The exact requirements may vary depending on the credit card issuer.
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