As Diwali and Dhanteras shopping accelerates, advisers warn that missed payments, hidden fees and credit damage can turn convenient BNPL plans into expensive long-term borrowing.
As Diwali and Dhanteras shopping picks up speed, so does the appeal of “buy now, pay later”. The offer looks simple enough: take home the phone, jewellery, clothes or homeware now and settle the bill later, often without a credit card and, on the face of it, without immediate cost. But the growing popularity of these plans has prompted fresh warnings from personal finance writers and consumer advisers that festive convenience can quickly turn into a costly borrowing habit.
The biggest danger is that deferred payment weakens the instinct to keep spending in check. Because the money is not leaving an account at the point of purchase, shoppers can underestimate how quickly small purchases stack up into multiple dues. That effect is especially strong during festival sales, when discounts, limited-time offers and easy checkout prompts are designed to encourage impulse buying. What begins as one purchase can become a cluster of unpaid instalments arriving at the same time.
Another risk is that the offer is rarely as free as it first appears. Many BNPL products are marketed as “zero cost” or interest-free, but that only holds if every payment is made on time. Once a due date is missed, late charges, penalty fees and interest can lift the true cost sharply. Some plans can carry annualised rates in the mid-20s to 40% range, according to consumer finance warnings cited by Indian outlets covering the festive shopping season. Add tax and processing charges, and a relatively small purchase can become far more expensive than expected.
The credit consequences can be just as serious. Many BNPL services are tied to banks or non-bank lenders, which means the borrowing is usually reported to credit bureaus. A missed payment can therefore damage a borrower’s score and make it harder to obtain a home loan, car loan or other mainstream credit later on. The result is a short-term shopping decision affecting long-term financial options, particularly for younger consumers who may not realise that a seemingly minor plan can show up as a formal loan record.
There are also hidden costs buried in the fine print. Fees labelled as convenience charges, platform usage costs, account maintenance charges or processing fees can erode the promise of easy credit. If a buyer converts a purchase into instalments, there may be additional charges, and failed auto-debits can trigger bank bounce fees on top of lender penalties. For households already juggling festival spending, that can create a squeeze that is hard to manage and even harder to reverse.
The most dangerous stage is when one payment plan is used to cover another. With several BNPL accounts running at once, repayment dates can land close together, increasing the temptation to borrow again simply to clear the last bill. Financial writers have warned that this pattern can become a debt trap, bringing stress, collection calls and a creeping sense of financial loss of control. The safer approach is blunt but effective: set a hard budget before shopping, buy only what can be paid for from existing funds, read the terms carefully and, if BNPL is unavoidable, repay well before the due date.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
