The Problem with 'Pay Later'
BNPL services have become a common sight at online checkouts, offering the tempting ability to buy items immediately and pay for them in smaller instalments. This convenience, however, can mask significant risks. The ease of a single click can encourage
impulse buying, pushing shoppers to spend more than they can truly afford. Many users forget that BNPL is still a form of debt. Managing multiple small purchases across different platforms can become confusing, and missing a payment can lead to steep late fees, penalty interest, and a negative impact on your CIBIL score. In fact, some reports indicate late payment interest rates can be as high as 30-40% annually. The Reserve Bank of India (RBI) has even stepped in to tighten regulations, highlighting concerns around a lack of transparency and the risk of over-borrowing.
Rule 1: Create a Dedicated Festive Budget
Before you start shopping, the most crucial step is to create a specific budget just for the festive season. List all your anticipated expenses: gifts, new clothes, home decor, sweets, and travel. Assign a realistic spending limit to each category. This isn't about limiting your joy, but about planning for it. Having a clear number in mind prevents the kind of mindless spending that BNPL encourages. When you know your total limit is, for example, ₹20,000, you are less likely to be tempted by an offer that pushes you over that amount, no matter how easy the payment terms seem. Sticking to your list is just as important as making it.
Rule 2: Unmask 'No-Cost' Offers
Many BNPL schemes are advertised as 'zero-cost' or 'interest-free', but this is often misleading. While you may not be charged interest upfront, the cost is frequently hidden elsewhere. Sometimes the product's price is slightly inflated to cover the interest the seller pays to the finance company. Other times, there are processing fees or other charges buried in the terms and conditions. The real danger lies in late payments. Missing a deadline can trigger substantial penalties that quickly erase any discount you thought you were getting. Before you click 'accept' on a BNPL offer, always read the fine print regarding late fees and other potential charges.
Rule 3: Embrace the 24-Hour Cool-Down Period
Festive sales are designed to create a sense of urgency, encouraging you to buy on impulse. BNPL services amplify this by removing the immediate pain of payment. A powerful way to counteract this is to implement a personal 24-hour waiting period for any non-essential purchase. If you see something you want, add it to your cart and walk away for a day. This simple delay helps you distinguish between a genuine need and a fleeting want. More often than not, the initial excitement will fade, and you’ll be able to make a more rational decision that aligns with your budget rather than the seller's marketing tactics.
Rule 4: Prioritise Cash and Debit
The easiest way to resist the allure of BNPL is to prioritise paying with money you actually have. Using cash or a debit card creates a natural friction that makes you more mindful of your spending. Since the money leaves your account immediately, you have a much clearer and real-time sense of your financial situation. If you must use credit, try to consolidate your spending onto a single card that you can track easily, rather than juggling multiple BNPL accounts. This prevents the common problem of losing track of several small payments, which can lead to missed due dates and unnecessary penalties.
Rule 5: Track Every Rupee Spent
Once you have a budget, tracking your spending is essential to ensure you stick to it. This is especially important when using different payment methods. You can use a dedicated app or even a simple notebook to log every festive purchase. This habit brings total transparency to your spending and alerts you when you're nearing your category limits. It's easy to approve four different BNPL purchases of ₹2,000 each and forget that you've just committed to paying back ₹8,000. Seeing the total accumulate in one place provides a necessary reality check that can help you pull back before you overspend.
