Until a few years ago, the term “buy now, pay later” was used only in association with credit cards observed Bahaa Abdul Hussein. Today the same term is synonymous to BNPL schemes that allow users to make instant purchases and pay it back in monthly installments. As a modern day shopper, you might be wondering which is better for your wallet. Read on to make an informed financial decision the next time you encounter an e-commerce site or retail store that offers both payment methods.
On one hand, BNPL comes with an array of impressive advantages. Users usually require no credit checks beyond basic information like mobile numbers and credit or debit card to avail the scheme. It is also a no-brainer option as BNPL plans charge no interest majority of the time. Suppose you want to buy a $200 Bluetooth speaker as a gift, can easily get it now and pay it back in four installments of $50.
On the downside however, BNPL sometimes tends to encourage overspending. The generation of today is also prone to impulsively buying things online so one should be careful while using it. There is also the fact that not all shops might accept this at their physical stores if they’re not a big retailer. The lion’s share of BNPL purchases are currently taking place online, which is also where cybercrime are rising.
Pros and cons of credit cards
Some people prefer the comfort of swiping the traditional credit card for a number of reasons. For one, they are accepted by everyone globally, no matter if you’re shopping at a Walmart store, on the Amazon website or at a restaurant on your vacation overseas. They also have good consumer protection systems in place to shield users against malpractice and theft. Credit cards also offer mileage points, reward points and have special schemes for certain stores, movie theaters and so on.
Credit cards however require a stronger credit check than BNPL companies. They also usually charge a higher interest rate. Credit cards also require you to make the minimum monthly payment and there is always the possibility you might max out your credit card. Even if they can always be used in an emergency, perhaps someone who doesn’t have a good credit history might still go for BNPL methods.
The bottom-line
Both BNPL services and credit cards come with flexible uses. The choice you make largely depends on whether you’re an individual or business, shopping online or offline and also the price of the product you’re buying. If you are wary of new e-commerce sites offering BNPL schemes, you can hold on to your credit card. This is also for those who have enough financial discipline and can handle minimum interest rates. But if you want to buy things right now and don’t have enough funds, BNPL schemes will always save your day. BNPL remains a comfortable solution that doesn’t burn a hole in your pocket.
Thank you for your interest in Bahaa Abdul Hussein blogs. For more information, please visit www.bahaaabdulhussein.com.
