What you should know about credit card instalment plans

Credit cards are staggeringly easy to use, but can be challenging for even the best of us to pay off in full. 

You may not be aware that some card providers offer a credit card instalment plan, which simply means you pay off your credit card debt in parts, as opposed to one lump sum each statement period.  

In some cases, credit card instalment plans can still involve paying interest on the outstanding credit card balance, but often the card company offers to reduce the rate, or waive it completely, for the term of the plan. It’s worth checking if you have to pay any additional fees or charges when choosing to pay through a credit card instalment plan.

Let’s explore what exactly a credit card instalment plan is and which Australian credit card issuers offer them. 

What is an instalment plan on a credit card? 

A credit card instalment plan allows you to make regular repayments off the card balance, as opposed to the more traditional method of paying off the balance in full each statement period, or when cash flow allows. 

One of the benefits of instalment plans is you can pay what you can afford to pay off at regular intervals and may receive a lower - or no - interest rate. If you are in a financially stressful situation, having the flexibility to spread out your credit card repayments may offer some much-needed relief to your budget.  

Keep in mind that credit card instalment plans often have strict conditions attached, and you often have to commit to making regular, minimum repayments. As you may be spreading out your payments due to financial issues, the issuer will want to reduce the heightened risk that you may not be able to pay off your debt. If you fail to make a scheduled repayment, you could attract a fee or interest.  

It’s always worth going through the terms and conditions to make sure they work for you before you consider a credit card instalment plan. 

Which Australian card issuers offer instalment plans? 

Source: RateCity.com.au. Data accurate as of 21/02/2023. 

What to consider with credit card instalment plans

Credit cards with added benefits like instalment plans, or even rewards programs or complimentary travel insurance, often come with higher-than-average annual fees. If you’re considering a credit card with an instalment plan due to financial issues, this may not suit you. It may instead be worth considering a lower fee or lower rate option instead. 

Similarly, in exchange for a lower, or waived interest rate, credit card instalment plans often require cardholders to commit to making certain monthly repayments. These arrangements may be better suited to people who have the capacity to pay off their card fairly consistently (i.e a regular income). Again, if you fall behind, there could be consequences for the hip pocket.

A credit card instalment plan may also include conditions about exiting or closing the plan, either midway or after paying off the full amount. As always, it’s important to read the fine print.

Compare credit cards