Credit card instalment plans

A credit card instalment plan is a payment option that allows you to spread out your credit card repayments over a set period of time, rather than paying off the full balance every statement period (or when your cash flow allows).

With a credit card instalment plan, you may make regular, smaller payments that fit your budget - often without being charged interest on your outstanding balance. This can be an easier and more flexible way to pay off your debt. 

However, instalment plans may have strict regulations and criteria attached, and customers can incur higher charges if they are unable to meet their regular payment schedule. It is crucial that you carefully review the terms and conditions before considering an instalment plan to ensure it suits your financial situation and budget.

Credit card instalment plans offer several benefits to credit card users, especially those who are looking for a more flexible way to manage their finances.

Helpful in difficult situations

If you are currently experiencing financial difficulties or unexpected higher expenses, paying a balance in full could be difficult, and you may be charged interest. By spreading out your credit card repayments over a longer period of time, you may be able to lessen the immediate financial stress on your budget, avoid accruing even more debt, and ensure your balance is paid in full.

Low or 0% interest offers

Some credit card issuers offer instalment plans with lower interest rates, or even no interest, compared to standard credit card purchase rates. This means that a credit card instalment plan may allow you to save money on interest charges - especially if you have a larger balance due. 

Stability in your repayments

You may gain greater stability in your budget and better control over your debt by utilising an instalment plan. When you commit to a fixed repayment schedule for your outstanding card balance, you’re ensuring that you know exactly how much you will repay each week/fortnight/month, and you can plan your budget accordingly.

Improve your credit score

It’s worth keeping in mind that paying off your credit card balance helps showcase to card providers and the credit reporting bureaus that you are reliable with your finances. By making regular, timely repayments towards your credit card debt, you could help to boost your credit score.

Paying off a credit card balance is no easy feat, especially if you’ve just paid for a big-ticket item like a holiday or a wedding. While a credit card instalmenet plan can be a helpful option for some cardholders to pay off their card balances, it’s worth comparing a range of alternatives available.

Personal loans 

If you’re looking for a fixed repayment schedule that will ensure a debt is paid off at the end of it, you may want to consider a personal loan. Unlike credit cards that allow you to make minimum repayments on a debt for the next 30+ years, personal loans ensure that debts are paid off through fixed loan terms, typically 1-5 years. 

Personal loans also generally have lower interest rates than credit card purchase rates, meaning you could avoid snowballing your debt further through interest charges. You’ll just need to budget according to ensure you do meet all your loan repayments on time, or risk defaulting on the loan and impacting your credit history. 

Balance transfer 

Another option to consider is to utilise a balance transfer credit card offer. These credit cards allow you to transfer your outstanding balance to a new card typically charging zero interest for a set period of time - anywhere from six months to two years. This works similarly to an instalment plan in this way, but you cannot make any new purchases with the credit card, as your balance will immediately begin accruing interest at a higher purchase rate. 

Buy now, pay later platforms 

If avoiding interest charges is the name of the game, it could be worth considering switching to a buy now, pay later (BNPL) platform like Afterpay for your purchases. BNPL allows customers to make purchases that they then repay on fixed instalment plans - typically fortnightly payments for four or six weeks - without interest. 

BNPL repayment terms are almost always much shorter than those offered for credit card instalment plans, so keep in mind that they’re designed for smaller purchases, and may offer much lower credit limits. While interest is not typically charged, there are a range of fees that providers may charge you with, such as late payment fees or account-keeping fees.