Uni 1/3rd Card Review

Uni 1/3rd Card is a unique Buy Now Pay Later (BNPL) product that allows you to split all your spending into 3 EMIs for free. Basically, all the spending done in a month can be paid back in 3 equal monthly instalments without any interest or charges. However, if you decide to pay in full, you get a 1% discount/cashback on the total bill. So, should you apply for this card? Or move your spending from credit cards toUni 1/3rd Card? Read my review, wherein I talk about the key highlights of this card, how it differs from traditional credit cards and highlight a few shortcomings too to take an informed decision.

What is the Uni 1/3rd Card?

Uni 1/3rd Card is a Buy Now Pay Later (BNPL) product that gives you the ability to split monthly spends in 3 equal instalments to be paid over 3 months, without any charges or interest. However, do remember that it is not a credit card, in strict terms. However, for all practical purposes, it works just like one. In addition, since the card issued is based on the Visa platform, thus acceptability should not be an issue both offline and online.

In the background, 3 entities are working in tandem.

1. An NBFC (Liquiloans) – gives you the credit limit.
2. RBL Bank – Issues the card. This is a prepaid card, much like a forex card or bank gift card that we might have purchased at some point.
3. Uniorbit Technologies or Uni – The fintech that brings the technology to make it all work and give you a credit card experience.

Applying for Uni 1/3rd Card is very simple. You just need to download the Uni Cards app from Google Playstore and share few details. Within a few minutes, your card will be visible in the app. The physical card comes in 5-7 days by courier.

To date, my experience with customer care both on-call and on Whatsapp has been pleasant. This could be because they have limited customers. I hope that they maintain the same service levels once the number of customers scale-up.

What’s the USP of Uni 1/3rd Card?

As mentioned a couple of times already, Uni 1/3rd Card USP is splitting monthly spends in 3 EMI without any interest or charges. It is like getting a free credit period of 90-120 days as against 15-40 days offered by credit cards. If you opt to make full payment for the month, you get a 1% discount on bill payment. Apart from the whole bill, you may also opt for only specific transactions to be split into 3-EMI at no extra cost. This can be useful for managing cash flows for many of us.

My interaction with customer support reveals that they don’t charge interest at all. Even if you miss your payments or make late payments. They just charge you late fees.  More on this later.  🙂

My take on the card

Uni 1/3rd Card is surely a unique product that gives the convenience of paying in 3 EMIs for free. However, I won’t move my spending from credit cards to Uni 1/3^rd card. Not because I love minting credit card points but because it does not make economic sense.

Interest savings for 90 days is lower than reward points earned

Assume that you were to spend 21,000 on Uni 1/3rd Card. On the due date, you need to pay only 7000 in the first month. Therefore, you can earn interest on the remaining 14000 for 1 month. Now at the end of the second month, you will pay 7000 but still earn interest for 1 month on the last instalment of 7000. Assuming 8% FD interest rates you will earn interest of only 140.

This result in a 0.7 % reward rate on the original 21,000 spent. Now, many credit cards offer you a reward rate or cashback much higher than 0.7%, the moment you spend 21,000 on the credit card. A few of them are Axis Ace, Amazon Pay, Amex MRCC, IDFC Credit cards, One Card etc. Thus earning reward points on spends and making on-time payments is more rewarding than going for 3 EMIs.

Only late fees and no interest on Uni 1/3rd Card- How does it fare?

As mentioned earlier, customer care told that Uni 1/3^rd card does not charge interest on late payments or missed payments. They only charge late payment fees. This piqued my interest to compare a Uni card with a credit card. Uni card does fare better than the credit card on this scale.

However, the late fees applicable on Uni card is significantly higher than other credit cards at higher outstanding amounts.

The below table shows what happens if you were to make a purchase of 21,000 and pay the entire outstanding along with late fees at the end of 3 months. You end up paying 24,000 instead of 21,000. i.e. 3000 extra. This in percentage terms comes to ~14% in 3 months, annualised roughly 57% interest rate.

The same scenario in credit cards could play out in 2 ways.

1. Make no payment at all for 3 months. In this case, you need to pay almost 5000 more in 3 months. This is 24% higher in absolute terms and nearly 96% annualised interest rate. ( This is why we should avoid late payments on any credit product, the interest compounds very sharply)

2. The second scenario is if you pay the minimum amount due for 2 months and then clear the entire bill. You end up paying around 24000 to the card company. Something very close to what Uni card charges.

I have tried to be as accurate as possible in the above calculations; however; I may have gone wrong. Please point out, if that’s the case, will correct the calculations.

No doubt, that in the above scenario Uni 1/3^rd card fares better than credit cards. However, if you intend to pay late fees either to Uni or to credit card companies, you are on the wrong website and credit cards or BNPL products are not for you; please stay away from them. J

Some shortcomings of Uni 1/3rd Card

Below are few shortcomings of the Uni 1/3rd Card that I came to know.

1. No reward points: Uni 1/3rd Card gives no reward points if you opt for 3 months EMIs. Even if paid in full, the 1% reward rate is too low. This for me is the biggest drawback with Uni 1/3^rd I have highlighted in multiple articles (Plan your Olympic trips with credit cards, Singapore return tickets at only 2 rupees, 4-6% on Amex credit cards, strategy to get 8-10% reward rate etc ) that credit cards if used smartly can give you returns of more than 5% and even 8-10% in many cases. Uni card app does talks about introducing Uni coins as rewards currency along with 1% cashback soon. Let’s hope they are not another Cred coins.

2. No wallet load: As of now Uni 1/3rd Card cannot be used to load money into any digital wallet. This takes away the many cashback and discounts you can earn on making payments via wallets. Uni’s customer care has acknowledged this issue and mentioned that they are working on this on priority. Let’s hope this comes very soon, but as of today, this remains a drawback.
3. No forex spends: You cannot use it to make forex spends. Therefore, you cannot take Uni 1/3rd Card along with you on overseas travel nor use it on a foreign website.
4. No cash withdrawal: You cannot withdraw cash from ATM using a Uni card.
5. Currently, no 6, 9, 12-months EMI product: Since Uni 1/3rd Card is still in the beta stage this option is not yet available. They are working on introducing these options.
6. TAT on customer issues may be longer: Since there are 3 parties involved; an NBFC, a card issuer bank and a fintech; compared to just a bank in the case of credit cards. It may just happen that certain customer issues may take longer to resolve.

Few key points from the fine print i.e T&Cs of Uni 1/3rd Card

Uni 1/3rd Card may not be free forever:

As per the T&Cs of Uni 1/3rd Card, you may be charged a joining fee of up to 2499. So, the card is currently free, but may not remain so in future.

There may be penal interest levied on late payments:

T&Cs do mention that if Minimum Amount Due (MAD) is not paid on time then there can be late fees and penalties. However, the customer care executive mentioned that there are only late fees. Therefore, probably penal interest on lines of credit cards may come in future.

The credit line may be frozen if not used for 6 months:

The wording is, “Please note if the Loan is not utilized for a continuous period of 6 (six) months by the Borrower, the same will be frozen and will not be available for use till the Borrower activates the Loan by completing due diligence as mandated by the Lender.” Now, this can be problematic since many keep credit cards in their wallet only to be used in emergencies.

6, 9, 12-months EMI products may come at a high-interest rate:

T&Cs talk about Annual Percentage Rate (APR) on EMI of up to 30%. So likely that higher tenor products will come at a high-interest rate.

Who should apply for this card?

If you have read until here, you would realise that Uni 1/3rd Card is not a replacement for credit cards. However, someone who values liquidity more than anything else will surely find Uni 1/3^rd card useful. In addition, someone who is not able to get a credit card till now may apply for this product. Build a credit history and then graduate to credit cards. Further, someone who is not into the points and miles game but just wants a credit product for the convenience it offers can also opt for a Uni card.

In fact, someone with a credit card too can keep this card as a backup where on certain purchases if “no-cost EMI” is not offered then Uni card be swiped, but not sure how to deal with 6- months of continuous use or freeze on credit line will be tackled.

Conclusion

In conclusion, Uni 1/3rd Card is a unique product that may find users in certain segments. However, I don’t think, as of now, it replaces the credit cards in our wallets.

What do you think about Uni 1/3rd Card? Are you going to apply for it? You think these BNPL products can replace credit cards at some point?

Image Courtesy: Photo by Dominik Lange on Unsplash