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Buy Now Pay Later: The facility of ‘Buy Now Pay Later’ is definitely convenient, but it is also a loan. Make payments on time, otherwise it can spoil your credit history.
Buy Now Pay Later: Nowadays, the trend of ‘Buy Now Pay Later’ i.e. BNPL has increased rapidly in online shopping. This scheme gives you the facility to buy goods immediately and pay the price later. It sounds like an easy and interest-free offer, but actually it is a kind of loan and now it has a direct impact on your credit score.
How does BNPL work?
Platforms like Amazon Pay Later, ZestMoney, Simpl give customers limits ranging from Rs 10,000 to Rs 1 lakh. Under this facility, you can make immediate purchases and have the option to pay the amount in full within 15 days to a month or in installments. Earlier ‘buy now pay later’ transactions were not sent to credit bureaus, but now this data is reported to agencies like CIBIL and Experian.
impact on credit score
If you make payments on time, it can prove beneficial for you, especially if you do not have any credit card or loan history. But if you miss even one installment, your credit score can fall by 50-100 points, that is, the facility of Buy Now Pay Later can become a crisis at any time.
Hidden dangers of ‘buy now pay later’
Opening multiple ‘buy now pay later’ accounts increases your total borrowing. This worsens the credit utilization ratio and makes you appear ‘credit hungry’ in the eyes of banks. In such a situation, it may be difficult to get a big loan or credit card.
Tips for smart user
- Maintain only 1-2 ‘buy now pay later’ accounts.
- Pay every installment on time.
- Keep an eye on the total outstanding amount.
- Close the account after payment.
- Check CIBIL or credit score report every few months.
