Pay Later Cards Or Credit Cards: Which Carry Lower Costs?

Read about the benefits of BNPL cards & credit cards to find the best suit for you. 

A decade ago, buy now and pay later meant for purchases through your credit card. But in recent years, many banks, e-commerce services, and other fintech players provide an exclusive scheme known as Buy Now Pay Later. Under BNPL, the shoppers can purchase now and pay the money on a future date with an interest-free period.

This is somewhat similar to credit cards which enable you to purchase now and payback in various installments over time. Both the schemes offer an interest-free repayment window. But, what’s the necessity for two different products that perform the same? Read on to know the key differences in the fee, rewards structures, and other features of the BNPL cards and credit cards.

Let’s assume two scenarios:

In scenario 1(Credit cards)

A person does a Rs 30,000 transaction on a credit card. Now, this money will be due at the end of the month for the customer to pay back. In case the customer makes a delay in payment, then the user has to pay 2 charges. One is a late fee as per the slab of Rs 30,000 and another is penal interest charges (42 percent APR + GST) applicable from the transaction date on the entire amount of  Rs 30,000.

If the user makes the payment on time but fails to pay the entire amount (Rs 30,000), then whatever is paid less, the user pays penal interest charges on that amount applicable from the date of transaction.

Scenario 2( BNPL)

A user does a Rs 30,000 transaction through a Pay Later card. Now the monthly bill is only Rs 10,000 for the cardholder. If the cardholder fails to pay Rs 10,000 overtime and then the digital lender charges two fees to the cardholder. They are

  1. The late fee as per the slab of Rs 10,000 ( not for 30,000

2. Carry forward fee which provides an additional month for the user to pay back his/her bill. The carry-forward fee is only Rs 10,000. This type of fee is a fixed fee between 3-5 percent.

A buy now pay later card will help the user to pay back the money more conveniently as per their terms. The biggest benefit of using a BNPL card is that the charges are quite lower as it is imposed on a particular portion of the bill amount. But for credit cards, the charges are applied to the entire bill amount.

However, if you are still uncertain about paying later, check below to know the difference between a pay later card and a credit card.

ParametersPay Later cardsCredit cards
Eligibility criteria:  To avail of BNPL cards, the applicant should be a resident of India.The age requirement is above 18 years. In some cases, the maximum age eligibility is 55 years. The applicant should be a salaried individual. The applicant should live in tier 1 or tier 2 cities.The applicant is required to have all KYC-related documents and bank statements.The minimum age of 18 years is required to avail of a credit card in India. The minimum annual salary should be between Rs 1 to Rs 3 lakhs. Salaried and self-employed people can apply for a credit card.  
Hidden charges:The buy-now-pay-later cards are transparent and have a low-cost pricing model.Credit cards levy a lot of hidden charges.  
Repayment tenure:  Generally, the pay later card comes with an interest-free credit period of 15 days.Some lenders provide interest-free credit periods of up to 45 days. The top players such as Uni, Slice, etc. offer up to 90 days of interest-free credit period on buy now pay later cards.Usually, for Credit cards, the interest-free credit period is between 18 to 45 days where you can pay in full or convert into EMIs (up to 36 months) for select payments.  
Approval process:  For Pay Later cards, the applicants have been instantly onboarded. And there is no tedious process involved in BNPL cards.  The approval is based on the credit score of the applicant. The credit card approval process may be long and time-consuming as all the submitted details are checked by the lender first before granting the credit card.
Annual and joining fee:  No annual and joining fee is imposed on the later cards.  Credit cards have charges like joining fees, recurring annual fees, etc, which are charged higher for premium cards. Generally, the joining fee arrives up to Rs 1,000 and changes across different card issuers.  
Late Payment interest:  The maximum late payment interest charged by many fintech players is around 2.5% a month, whereas  30% per annum in the case of non-payment.  Monthly Revolving Credit – 3 percent to 3.5 percent monthly   Annual Revolving credit – 36 percent to 42 percent annually  
Late Payment fee:The late payment fee is charged as per the slab of the bill amount.In the case of credit cards, the late payment fee differs from one card to another card.  
Benefits:  The pay later card users get discounts and offer on the partnered merchant platforms. BNPL lenders offer 24×7 customer support on different platforms like Whatsapp, email, and call. Credit cardholders can earn reward points, cashback, and air miles on most credit card purchases.  


The different features of a credit card and a Buy now pay later card are listed above. It is up to you to decide which one is right for you in terms of its benefits, repayment facility, tenure, credit score, and a lot more things. It is always essential to evaluate all the features and characteristics of both pay later and credit cards before opting for any one of those cards.

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