Your money: credit cards, BNPL or EMI cards – which is right for you?

But if you need more benefits, credit cards can be more beneficial than EMI and BNPL cards if you pay your dues on time.

Adhil Shetty

Usually people prefer an inexpensive, convenient and secure tool when paying for purchases, booking passes, hotel rooms, etc. Tools like credit cards, EMI cards and Buy Now Pay Later (BNPL) are gaining popularity among people who need instant loan funds to meet their spending needs.

However, these three tools have different characteristics and benefits. So which one is best for you? Let’s compare these three tools to help you make an informed choice.

Credit card
Credit cards offer up to 50 days of interest-free periods, EMI options for eligible expenses, membership giveaways, promotional offers, cash back, bonus points, and more. Banks offering credit cards charge interest of 3-4% per month in addition to late fees if you fail to pay the minimum amount due during the interest-free term. In addition, premium benefits are sometimes only available for high-end card options, which usually charge a membership fee as well.

It is important to apply for a credit card that you are eligible for and the benefits of which match your spending habits. Credit cards should be used in a disciplined manner so that all fees are paid every month to avoid interest penalties and downgrades in your credit rating.

EMI cards
EMI cards are like pre-approved lending instruments that you can use to buy things on installments from online retailers without paying interest. EMI cards are easy to understand and use, and companies that issue EMI cards allow for the collection of the outstanding amount free of charge.

Buy now, pay later (BNPL)
You can use this feature to buy items without paying immediately and pay the actual payment later. BNPL issuers allow you to make payments from 15 to 45 days without interest. The amount due is automatically debited from the user’s bank account on the day of payment. However, if you do not repay the amount due within the due date, the issuer will charge interest at the applicable rates. BNPL users can convert contributions to EMI if they do not want to refund the full amount on the day of payment if they opt out at the time of payment to the respective merchant.

What is right for you?
Choose the product that suits your needs and costs less. Bonuses like cash back, airline miles, bonus points, and amenities like special discounts, airport lounge access, and more can make a big difference. Therefore, credit cards can be a good option if you are looking for a unique solution. Many credit card clients are also eligible for pre-approved loans at competitive interest rates, making them a great tool in an emergency.

EMI and BNPL cards are useful if you want to use them in their chain stores or related brands. If you are looking for a spending tool to benefit from a line of credit, or if you are not eligible for a credit card of your choice, you can compare EMI and BNPL cards to find the best match. They could also be used quickly compared to pre-approved credit cards. But if you need more benefits, credit cards can be more beneficial than EMI and BNPL cards if you pay your dues on time.

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