WhatsApp is end-to-end encrypted, that's probably* better than using Telegram.
* Unless you want to go into a conspiracy theory that all the Meta employees can see the source code and nobody has ever felt like whistleblowing about the backdoor Meta put into WhatsApp, that is.
WhatsApp obviously more encrypted than Telegram since later have no proper E2EE whatsorver by default and also sync all history from server.
Its still preferable to use Signal since now it actually supports numberless registration. Hopefully they will actually fee payable not via credit card at some point.
Don't forget that metadata is not encrypted, so Meta know who you are writing to, who writes to you, who your contacts are, all the usage pattens of the app, and more metadata (not sure if it's still the case, but a few years ago WhatsApp even uploaded the battery state of your phone to Meta).
These two things are mutually exclusive. They can store encrypted backups on a server somewhere, but unless they have the decryption keys from both parties (E2E) then no, it can't be stored in plain-text.
If you don't encrypt the backups, they are unencrypted, yes. That's why you should encrypt your backups. It's baked right into WhatsApp on the screen where you manage your backups.
* Unless you want to go into a conspiracy theory that all the Meta employees can see the source code and nobody has ever felt like whistleblowing about the backdoor Meta put into WhatsApp, that is.