What are O% Installment Plans?

Installment plans on credit cards are everywhereEveryone knows making a purchase on your credit card that you can’t repay at month-end spells big trouble.  But what if you could make a credit card transaction that allows you to spread your repayments over the next few months or years, at no interest at all?  No, this isn’t a myth.  In fact, such a feature may already be available on your existing credit card… in the form of 0% Installment Plan.

What is 0% Installment Plan?

An Installment Plan is a repayment scheme that allows you to use your credit card to make a transaction, and then repay the amount in piece meals over the course of months or years.  A 0% Installment Plan is one which allows you to do the above at absolutely no interest charges for the entire installment period.

Example of How a 0% Installment Plan Works:

– Say you’ve made a purchase of PHP12,000 using a 0% Installment Plan with a 12-month repayment period; your installment amount would be PHP12,000 / 12 months = PHP1,000 every month over the course of 12 months.

– By paying the installments promptly and making sure you adhere to all terms and conditions, you would not be charged a single centavo in interest during the entire period.

At present, most major banks in The Philippines have some form of 0% Installment Plans available to their credit card users.  Installment periods differ from bank to bank, and could be as low as three months up to 36 months or more.  Generally, 0% Installment Plans is applicable only for purchases made at selected partnering outlets.

The Benefits of 0% Installment Plan

From a consumer standpoint, a 0% Installment Plan offers plenty of benefits, which include, amongst others:

The Obvious: Ability to pay for vital big-ticket items without incurring hefty credit card interest charges over a period of time.

– The Not-So Obvious: Option to put the lump sum which would otherwise be used to pay off the purchase in full into an investment account, hence earning interests from the banks.

How to Sign Up for a 0% Installment Plan

How do you execute a 0% Installment Plan using your credit card?  It is actually simpler than you think.  Just follow the following steps:

1) First, look for stickers or signs on retail outlets indicating that they offer 0% Installment Plans for your credit cards.  Alternatively, look up the websites of your banks for the list of participating merchants offering 0% Installment Plans.

2) Before making a purchase, check with the outlet on any terms and conditions you may need to adhere to for the 0% Installment Plan.  Some common ones include:

– The categories of items that can be purchased using a 0% Installment Plan

– The minimum purchase you need to make to be eligible

– The installment periods you can choose for your plan

– Extra administrative / installment charges you may incur to execute the plan (if any)

3) Once you’re satisfied with all the conditions binding the plan, make the purchase with your credit card as usual but make sure you indicate to the cashier than you’re paying using a “0% Installment Plan”. Well, they always ask for it!

4) If the plan is approved, your transaction would be authorized on-the-spot.  Thereafter, just make sure you pay the installment amounts promptly starting from the next credit card bill!

Love this article? You may also wish to read about the 4 things you need to take note of before you sign up for a 0% Installment Plan. 

Looking for a credit card with 0% Installment Plan?  Check out your available choices at our credit card comparison table!


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