how-is-the-buy-now-pay-later-payment-option-different-from-credit-cards

How is the Buy Now Pay Later Payment Option Different from Credit Cards?

How is the Buy Now Pay Later Payment Option Different from Credit Cards?

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As in this era, individuals look to make their life more comfortable, they are in search for more simple and easy payment methods to shop online. This is the reason companies have come up with different ways of payment like Buy Now Pay Later Apps (BNPL) and credit cards.

These 2 methods are popular payment options that allow consumers to make purchases without having to pay upfront. Both forms of financing have their advantages, but there are key differences between them.

BNPL is a type of financing offered by retailers or third-party providers that allow customers to purchase services or goods and pay for them at a later date. On the other hand, credit cards are a form of revolving credit that provide consumers with a line of credit that can be utilized to make purchases.

In this article, you will explore the key differences between credit cards and buy/book now pay later, including how interest is charged, the flexibility of the payment terms, the promotions and discounts offered, and the security of the transactions.

By understanding the differences between these payment options, consumers can make informed decisions about which financing is best for them.

Comparison between credit cards and BNPL

comparison-between-credit-cards-and-bnpl

  1. The difference between BNPL and credit cards is how interest is charged. With BNPL, customers are usually required to pay a fixed amount each month, which covers the cost of the purchase plus any fees and interest charges. On the other hand, credit cards usually charge interest on the balance carried over from month to month. This means that the interest charges on a credit card can add up quickly if the cardholder does not pay off their balance in full each month. That’s probably why the world has more than 360 million buy now pay later users as of 2022.
  2. Another critical difference between BNPL and credit cards is the flexibility of the payment terms. With BNPL, customers have more flexibility in paying off their balances. On the other hand, credit card holders are typically required to make regular payments over a specified period.
  3. BNPL providers also often offer promotions and discounts for customers who use their services. For example, some BNPL providers may discount the first purchase using the financing option. On the other hand, credit cards often offer rewards and incentives, such as cashback or travel points, for using the card to make purchases.
  4. Another difference between BNPL and credit cards is the security methods of the transactions. BNPL providers may not require a credit check. Still, they typically need customers to provide personal information, such as their name, address, and date of birth. On the other hand, credit cards usually have different security features than BNPL, such as chip and pin technology, to protect against fraud and unauthorized transactions.

Conclusion

Buy now, pay later apps and credit cards give consumers options for purchasing items without paying upfront. While both forms of financing have similarities, there are several key differences between them, including how interest is charged, the flexibility of the payment terms, the promotions and discounts offered, and the security of the transactions.

When deciding which financing is best for their financial planning, consumers should consider their personal financial situation, spending habits, and the terms and conditions offered by each provider.

Author Profile

Manuela WillboldOnline Media & PR Strategist
Blogger and Educator by Passion | Contributor to many Business Blogs in the United Kingdom | Fascinated to Write Blogs in News & Education I have completed a journalism summer course at the London School of Journalism and am an eBook author.