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BNPL Vs Personal Loan Vs Credit Card: Which Is The Best For Shopping?



When you need money for shopping; should you use your credit card, go for a personal loan, or use the BNPL credit facility? 

BNPL financing has been doing the rounds with multiple digital payment services and e-commerce platforms. The recent surge in e-commerce platforms has encouraged consumers to opt for digital payments modes to buy their necessities and wants. Digital currency is no longer limited to debit and credit cards; there are now EMI Cards and Buy Now Pay Later (BNPL) credit accounts. Though personal loans and credit cards offer a higher credit limit, BNPL seems to have enticed the current digital generation owing to its lenient application process and instant credit availability. 

The application process for these digital payment methods has also been made very quick and convenient. Consumers can apply and get one of these payment methods from the comfort of their home. E-commerce companies shower buyers with additional discounts and offers when they opt for a BNPL option, only encouraging the consumers more to opt for these payment options. 

But, is BNPL the ideal payment method for your shopping needs? Or is a credit card better? How can personal loans be leveraged for any big shopping transactions? 

We have listed the pros and cons of each payment method to help you with the decision. Read on!

BNPL (Buy Now Pay Later)

BNPL is a type of deferred payment that is mostly offered by e-commerce platforms in collaboration with banks and NBFCs. The BNPL limit is comparable to your credit card limit, except that it is determined by your average bank balance. As a result, it is less expensive than using your credit card.

BNPL, like a credit card, offers a 50-day interest-free period to settle the amount owed. A BNPL account is linked to your bank account, and monthly payments are debited on the due date automatically; You will not be late with any payments. When you use your BNPL account to make purchases on an e-commerce platform like Amazon, Flipkart, or, you can receive additional discounts.

Since BNPL accounts are normally linked to the issuer platform, you won’t be able to utilise them on any other platforms. As it is connected to your savings account, the credit limit is usually lower than a credit card. A BNPL account also doesn’t come with many value-added features, such as a rewards programme, access to airport lounges, or fuel fee waiver offers.

Credit Cards

Credit Cards are, by far, the most used credit in India and elsewhere. It is convenient and safe. It offers great rewards and cashbacks to customers. The reward program is the best benefit that attracts millions of customers to possess multiple credit cards. 

Credit cards come with very high credit limits. They are generally based on your salary. Banks will offer a credit limit that is up to 3 times your gross monthly salary. This allows consumers to purchase their wants and repay them comfortably through the EMI option. Credit card management is also simple through a number of online methods. 

The major drawback of a credit card is its high interest rate. The APR is anywhere between 35 and 40%. So, while you may be able to make a partial payment, the interest rates will quickly double the total amount you owe the bank. Credit cards, if not handled correctly, can result in financial traps. Other high-priced charges on credit cards include late payment fees and cash advance fees. If you intend to enjoy some of the value added benefits, you may have to pay joining and annual fees for your credit card.

Personal Loans

It’s not clear if taking out a personal loan for shopping is viable unless it’s for a large-ticket item like whole household furnishings, wedding jewellery, or something similar. Personal loans, as the name implies, are unsecured loans with a large credit limit. However, just like credit cards, this comes with a high interest rate. Also, unlike a credit card or a BNPL, this is not a revolving credit kind. Not to mention the time it takes to process a loan. Then there’s the paperwork and eligibility requirements to deal with. On the other hand, BNPL is instant.

Digital payment methods have saturated the Indian market thoroughly. Starting from the local chaiwala to big-buck realty purchases, consumers are increasingly preferring to use digital transactions. So the choice comes down to BNPL, credit card and personal loan, and we think we have given you enough information to make an informed decision. 

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