Buy Now Pay Later (BNPL) services can become complicated for consumers if they end up with debts with multiple companies. There’s no rule or regulation that states you can only have one BNPL account, and banks have joined BNPL companies in offering their own version of instalment plans that are linked to a credit card account with that bank.
What is a credit card instalment plan?
A credit card instalment plan, like BNPL, is a structured way to repay outstanding debt. Consumers need to request this repayment setup as it’s not an automatic feature with all credit cards.
Most Australian banks offer some kind of credit card instalment plan, but they differ between providers and products.
BNPL companies such as Afterpay, Zip Pay, and Klarna, by comparison, are third-party providers. If you BNPL through one of these companies, you’ll make repayments through their respective websites.
Credit card instalment payment vs. regular repayments
With a credit card instalment plan you pay the fixed amount over a certain period of time. It could be 4 weeks or 3, 6 or 12 months, depending on your bank. It’s an agreed payment schedule. You can usually select either by the credit card balance or a specific purchase.
Issuers that offer instalment plans
Many Australian banks, big and small, offer instalment plans for credit cards.
Some examples include:
- Westpac: SmartPlan and PartPay
- CommBank: SurePay and StepPay
- ANZ Instalment Plans
- NAB: NAB Now Pay Later
- ING Instalment Plans
- Citi Instalment Plans
- St. George: Plan&Pay
- Bank of Queensland Instalment Plans
- Bankwest Instalment Plans
- Bank of Melbourne: Plan&Pay
If you don’t see your bank on this list, be sure to contact customer service and ask about their credit card repayment options.
How to make a credit card instalment payment
Check with your bank how they structure credit card instalment payments. If you’re with Westpac you can use PartPay to split purchases into four instalments over six weeks or SmartPay for bigger transactions, over three, six or 12 months. If you’re with CommBank or ANZ, you can also choose between three, six or 12-month plans. These programs are interest-free, but fee-based.
Alternative banks such as ING offer credit card repayment plans from three months up to seven years. It’s a no-fee set-up but does charge a low interest rate.
You can use an instalment plan to pay back purchases and pay off your credit card balance.
Examples of an instalment payment on a credit card
Here’s one way it can work:
- Log into your online account and navigate to the credit card account.
- Under the instalment plans section, select the transaction amount (or total balance) you’d like to pay off incrementally.
- Choose a payment schedule of 3, 6 or 12 months.
- Watch for notifications for when your payments are due — these will form part of your minimum monthly repayments.
- If you follow this instalment schedule and make payments on time, you’ll only be charged a set-up fee and no interest. The fee depends on your bank. If your instalment plan is for six months with ANZ, it’s 3.5%. If your total instalment plan is $2,000, the fee is $70 per month. If you bought a MacBook for $1,800 on the six-month plan, you’d pay $63 per month.
Using your bank vs. BNPL
With instalments being a feature of your credit card, you have the same protections as your credit card, unlike BNPL services which are not regulated. It also helps control spending because you can’t go beyond your existing available credit.
Being a customer of the bank, you have more consumer power and choice, as opposed to going through external third-party providers. Having all of your financial accounts ‘under one roof’ at your bank can also help with money management.
How to compare instalment plans
You could have multiple instalments operating at once so it could get confusing to work out the most affordable fee structure for each transaction. For example, you can have up to 99 plans with ANZ.
If you’re new to credit card instalment payments, start with one or two. Weigh up the various payment schedules, calculating the total fees for the different options such as 3 and 12-month payment options and compare these to your credit card’s interest-free period. If you were to pay off the transaction within the interest-free days, calculate how it compares to the instalment plan.
You should pick the payment method that’s simple, easy to stick to, and will cost you the least.
Frequently asked questions about credit card instalment plans
No, it’s not a line of credit. It’s a repayment plan for outstanding credit card debt. The NAB Now Pay Later functions more like a credit card with a set limit ($2,000). It’s a digital card that’s used to make purchases that are paid off through the instalment plan.