Pay Later Vs Credit CardPay Later Vs Credit Card

Pay Later Vs Credit Card

In contemporary times, the use of credit cards has become a common practice among individuals, leading to a steady rise in the demand for these financial instruments. Recognizing this trend, numerous e-commerce entities and digital payment service providers have introduced the ‘Buy Now Pay Later’ (BNPL) option to cater to their customers’ preferences. This feature enables individuals to make purchases and defer the payment to a later date, akin to credit cards but with distinctions. Well-known examples include ‘Flipkart Pay Later,’ ‘Amazon Pay Later,’ ‘Paytm Postpaid,’ and similar services.

Comparison between Buy Now Pay Later and Credit Card

1. Approval:

  • Credit Cards: Approval process may take up to 30 days, requiring a credit history.
  • Buy Now Pay Later (BNPL): Instant approval, possible without a credit score but with a stable income.

2. Credit Limit:

  • Credit Cards: Offer higher limits (up to 10 lakhs or more per month).
  • BNPL: Limited credit, e.g., Flipkart Pay Later with a cap of Rs. 10,000.

3. Usage:

  • Credit Cards: Usable anywhere for various purchases.
  • BNPL: Limited usage, often confined to specific platforms (e.g., Amazon Pay Later for Amazon purchases).

4. Interest-Free Period:

  • Credit Cards: Provides an interest-free period of up to 50 days.
  • BNPL: Generally offers a shorter interest-free period (around 35-45 days), some may extend, but rarely surpass credit card terms.

5. Impact on Credit Score:

  • Both Credit Cards and BNPL can impact credit scores similarly.
  • Timely bill payments crucial for maintaining a good credit score.
  • Consider other factors like credit utilization ratio and average age of accounts.

6. Wise Credit Use:

  • Utilize both credit cards and BNPL wisely for a balanced credit mix.
  • Pay attention to factors beyond timely payments, such as credit utilization and account age.


  • Credit Cards and Buy Now Pay Later (BNPL) options have distinct differences.
  • Both options offer advantages, with BNPL being suitable for specific purchases and credit cards allowing flexibility for any purchase.
  • BNPL typically comes with a lower credit limit, but this doesn’t necessarily make it a disadvantageous option.
  • Combining the use of credit cards and BNPL can be beneficial for maintaining a diverse credit mix.
  • Utilizing BNPL responsibly and making timely payments can contribute positively to building and improving your credit score.

Frequently Asked Questions (FAQs)

1. What is the primary difference between Pay Later options and Credit Cards?

  • Pay Later options involve deferred payments for specific purchases, while credit cards provide a revolving credit line for various transactions.

2. Can I use Pay Later options for any purchase like I can with a Credit Card?

  • No, Pay Later options are typically limited to specific purchases, whereas credit cards offer flexibility for any kind of transaction.

3. Does using Pay Later affect my credit score?

  • Paying on time and responsibly using Pay Later options may not have a significant impact on your credit score. However, it can positively contribute to building credit when combined with other responsible credit behavior.

4. Are there credit limits associated with Pay Later options?

  • Yes, Pay Later options often come with lower credit limits compared to credit cards.

5. How do Pay Later options and Credit Cards contribute to a good credit mix?

  • Maintaining both Pay Later options and Credit Cards can diversify your credit mix, potentially positively impacting your credit score.

6. Can I sign up for Pay Later even if I already have a Credit Card?

  • Yes, it is possible and, in some cases, advisable to use both Pay Later options and Credit Cards to enhance your financial flexibility and credit profile.

7. Are there any disadvantages to using Pay Later options over Credit Cards?

  • Pay Later options may have limitations on the types of purchases you can make and might offer lower credit limits, but they are not inherently disadvantageous when used responsibly.

8. How can combining Pay Later and Credit Cards help in building a good credit history?

  • Responsible use of both Pay Later options and Credit Cards, including making payments on time, can contribute positively to your credit history and improve your credit score.

9. Can I switch between Pay Later and Credit Cards for different purchases?

  • Yes, you have the flexibility to choose between Pay Later options and Credit Cards based on the nature of the purchase and your preferences.

10. What should I consider when deciding between Pay Later and Credit Cards for a specific transaction?

  • Consider factors such as the type of purchase, credit limits, interest rates, and your ability to make timely payments when deciding between Pay Later and Credit Cards.

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