With all the benefits that Buy Now Pay Later and Easy Payment Plans have to offer – it’s easy to see why it appeals to consumers. While there isn’t a cut and dry answer to which option is better, here’s what you should keep in mind to choose the right payment plan for your needs.
Overall finances
While both flexible income options help make each purchase more manageable, it’s important not to make purchases on a whim. Splurging on unnecessary large purchases can set you back financially, especially if you have other obligations like outstanding debt and living expenditure.
Repayment plan and duration
Before you engage in a BNPL or EPP facility, make sure that you can afford to pay the monthly repayment on time. If you make late payments or miss the instalment payment for your EPP altogether, you may rack up late fees, and the 0% interest rate may be retracted without notice.
If you have trouble meeting your BNPL instalments, you may be charged with high interest rates and negatively impact your credit score (should it be reported to credit reporting agencies).
Unlike credit card EPP services that allow you to stretch your spending up to 36 months, BNPL providers often provide short-term repayment periods. For instance, hoolah lets you split your purchases into three interest-free monthly instalments.
Cost
Most users choose to use Buy Now Pay Later services for smaller purchases due to its fast and convenient payment process. As long you pay your payments on time, you won’t need to pay interest or late fees. The exact amount you’ll need to pay monthly varies depending on the terms and size of the purchase.
When it comes to EPP, the conventional focus is on large-ticket size items like electronics, home décor and appliances. Most banks impose a minimum spending requirement for you to qualify for 0% EPP. So, be sure to check for the minimum spend required with your respective banks before you swipe.
Additional offers and benefits
Some credit cards offer bonus perks such as cashback, travel insurance and exclusive access to airport lounges. If you only use BNPL services, you might miss out on other credit card deals.
Indeed, BNPL platforms are a fast and easy payment method for consumers that have trouble applying for credit cards due to a lack of credit history or low credit score. However, both come with considerable consequences if you split payments without careful consideration and don’t stay on top of your payments.
It goes without saying that both BNPL and EPP options have their merits and downsides. Ultimately, the choice depends on your financial situation, how well you manage repayments and your spending habits.
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