New Delhi26 minutes ago
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Diwali-Chhath season has started. In such a situation, purchasing increases significantly. One method of payment for this shopping, ‘Buy Now Pay Later’ (BNPL) i.e. ‘Buy Now, Pay Later’ has become a very popular method in the last few years.
From grocery to gadgets, apps and online stores give you the option of zero or no cost EMI or ‘three easy installments’. It seems very easy – take the goods today, pay the money gradually later.
But is it really safe for your pocket, or just a new way to accumulate debt? In this story we will try to understand everything related to it.
BNPL- Loan just by phone number and PAN card
The biggest thing about Buy Now Pay Later is that you get what you want very quickly and without any hassle. Unlike credit cards, BNPL works with just phone number and PAN card.
Especially for those youth who do not have credit history, this seems to be an easy way to take small loans. But the problem with this is that this ease just as quickly inculcates in you the habit of spending excessively and unnecessarily.
Charges hidden behind zero or no cost
Most BNPL schemes say that if you repay the money on time then there is no interest. But if a payment is missed, there are late fees, penalties, and sometimes interest rates as high as credit cards. What was a free installment option suddenly becomes an expensive loan.
What effect does it have on your credit score?
You might not know but BNPL transactions are reported to credit bureaus. If payment is late or missed, your CIBIL score can go down, just like it happens if you miss an EMI. At the same time, if you are using BNPL on many apps, then it becomes difficult to keep track of due dates and you may secretly get trapped in the debt trap.
BNPL debt trap for careless people
BNPL affects you mentally the most. Since the money does not have to be paid immediately, BNPL encourages you to overspend. Many small expenses add up to a big amount and when the time comes to pay all the installments at once, people get worried. That’s why experts say that BNPL is fine in emergency, but if you are not disciplined then it is a slippery path.
How to use BNPL smartly?
BNPL is a good instant credit facility, if used carefully like a credit card. Using it for important payments and strictly maintaining payment dates can give you a lot of benefits.
At the same time, it is also important to avoid borrowing on multiple apps simultaneously. If you do impulse shopping then it is better to stay away from BNPL. Instead, you should use debit card or planned credit.
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