Get the Most Out of Your Money with SNPL & BNPL

4 MinsDec 16, 2022

When it comes to making payments for your transactions or purchases, two options are available: save now, pay later and buy now, pay later. Which option is better? Let's understand.

Save now, pay later or buy now, pay later?

Save now, pay later: the concept

The save now, pay later option involves planning ahead for your purchases. You save up and then spend your savings on your purchases. For instance, say you plan on buying a TV that costs Rs. 30,000. You start saving Rs. 2000 every month to create the required corpus. You can save for 15 months or so till you accumulate Rs. 30,000 and then buy the TV. 

Benefits of save now, pay later:

  • You don't have to resort to credit which involves additional interest payments.
  • You can save and earn interest on your savings.

Drawbacks of save now, pay later:

  • It is not suitable for immediate expenses.
  • It is not feasible in a cash crunch.
  • You have to wait for making your purchases.

Buy now, pay later (BNPL): the concept

This is the opposite of save now, pay later. Under this concept, you complete your transactions on credit and then pay for them at a later date. Credit cards and BNPL modes allow credit transactions. The value of transactions gets added to your bill which is generated later on. You repay the bill and settle your dues.

Benefits of BNPL:

  • You don't have to wait for making your purchases. You can buy immediately and then pay later on.
  • It is very helpful in a cash crunch.
  • It helps you pay in the case of financial emergencies when you don't have sufficient savings.
  • If you do the credit card bill payment and clear your dues on time, you don't incur any additional interest charges.
  • Credit cards and BNPL platforms also earn you attractive rewards, discounts, and deals on your spending. For instance, the Axis Bank Flipkart credit card gives you unlimited cashback, complimentary lounge access at airports, welcome benefits, fuel surcharge benefits and more. So, with every transaction, you can save.

[Also ReadImportance of choosing a credit card that suits your needs]

Drawbacks of BNPL:

  • Non-payment of dues results in additional interest payments.
  • If you overspend or splurge, you might land in a debt trap. You might rake up very high bills, which might prove unaffordable to repay.

Which one is better for you?

Both saving and paying on credit have their set of pros and cons. Choosing one depends on your needs and suitability.

Saving and then paying is suitable when you have time on your hands to save and create a corpus for your purchases. It can also inculcate a habit of saving and make you a responsible spender.

On the other hand, buying on credit is immensely helpful in financial emergencies or when you are in a financial crunch. It can allow you to meet your financial obligations and then pay for them later on. The additional rewards and deals are an added bonus.

What should you do?

Assess your financial needs and savings. If you can save, you can save up for your purchases. But, if you want to meet an immediate expense or want to spend now, you can transact on credit. Apply for credit cards or register for the BNPL payment system and transact on credit. Also unlock deals and offers for a more rewarding shopping experience.

You can also use both depending on the nature of the financial obligations that you have. So, be smart. Pick the right mode of payment and enjoy the benefits that it has to offer.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.