What is a Credit Card Instalment Plan?
Credit card instalment plans are similar to “buy now, pay later” plans like Affirm, Afterpay, and Klarna, but they are offered by credit card issuers. With a credit card instalment plan, users choose an eligible purchase (or multiple purchases) to pay for with their card and agree to fixed monthly payments to pay off the eligible balance, along with a specified fee for the plan.
Which Credit Cards Offer Instalment Plans?
Many companies offer credit card instalment plans with varying terms. Typically, credit card issuers base their monthly plan fees on several factors, including the purchase amount, your account history, and your creditworthiness. Here’s how some card issuers compare:
Advantages and Disadvantages of Using a Credit Card Instalment Plan
Although credit card instalment plans can be convenient to use, they also carry some drawbacks that should be considered:
- The monthly payments are fixed amounts you can budget for.
- The fixed plan fees may be more expensive than fluctuating interest rates over time.
- You can earn rewards through your credit card’s rewards program.
- No application is required.
- Credit cards may offer purchase protection plans and additional benefits.
Should You Use a Credit Card Instalment Plan?
A credit card instalment plan can make spreading out payments more convenient and potentially save you money, if used responsibly. If you’re torn between a credit card instalment plan and a “buy now, pay later” plan (or another option), here are some questions to ask yourself:
- How much will you pay each month?
- Do you want to avoid the application process?
- Do you want to earn credit card rewards?
- Which option will save you more money?
- How much available credit do you have?
How to Use a Credit Card Instalment Plan for a Purchase?
If you decide to use an instalment plan, you can usually make the purchase as normal and then log into your account. Options for repayment terms and monthly payments will be displayed.
How Do You Pay the Fees for a Credit Card Instalment Plan?
The monthly fees for a credit card instalment plan are automatically added to your credit card’s minimum monthly payment, along with any interest charges on the balance if you’re carrying debt from month to month. So, you’ll only need to make one payment to your credit card issuer each month, but the amount may be significantly higher if you are only paying the minimum on your card currently.
Alternatives to Credit Card Instalment Plans
If you like the idea of financing large purchases with fixed monthly payments and potentially saving money, consider these alternative options to credit card instalment plans:
- “Buy Now, Pay Later” services
- Personal loans
- 0% annual percentage rate offers
- Installment loans
Conclusion
Credit card instalment plans can be beneficial if you’re making a large purchase and need a longer time to pay off your balance. Over time, the fixed plan fees could potentially save money compared to paying off a credit card balance with variable interest rates.
Frequently Asked Questions
What happens if you miss a payment on a credit card instalment plan?
What happens if you pay off a credit card instalment plan early?
How many instalment plans can you have at the same time?
The editorial content on this page is based entirely on objective and independent evaluations by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links provided for products or services offered by our partners.
Written by: Holly Johnson
Contributor
Read more from Holly
Holly Johnson is a credit card expert and writer covering rewards programs, loyalty, budgeting, and all things personal finance. In addition to writing for publications such as Bankrate, CreditCards.com, Forbes Advisor, and Investopedia, Holly Johnson owns Club Thrifty and is a co-author of the book “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love.”
Source:
https://www.cnet.com/personal-finance/credit-cards/advice/credit-card-installment-plan/
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