How to Use a Credit Card Installment Plan the Right Way
A credit card installment plan acts as a loan from your credit card issuer. It can be a convenient way to pay off a large purchase.
Some people may think the idea of installment payments with your credit cards is a recipe for debt, but it can actually make financial sense if you want to pay for a larger purchase over time. Here’s how they work and when to use one.
What is a credit card installment plan?
Installment plans are a form of credit. Instead of making one lump sum for your purchase right away, you pay in monthly installments over a set period — typically three, six, 12 or 18 months.
Some installment plans charge interest — others don’t. Likewise, some providers charge installment plan fees.
Purchases must typically be at least $100 to be eligible for an installment plan. Depending on your card and provider, installment plans may be available at checkout during in-person and online transactions, or you may be able to convert eligible purchases into installment plans via online or mobile banking platforms.
Who is an installment plan best for?
You may want to consider a credit card installment plan if:
You have to cover a large, unexpected purchase. If a big purchase would otherwise put you in the red, an installment plan may help make the cost more manageable.
You’re seeking an alternative form of credit. An installment plan could be a viable, more accessible credit option than a personal loan or line of credit.
You have the available credit. The transaction you convert into an installment plan still goes on your credit card and reduces your available credit, so if you’re at or near your credit limit, an installment plan may not be for you.
Installment plans vs buy now, pay later
Although similar, there are some key differences that separate installment plans from buy now, pay later programs.
Installment plan | Buy now, pay later | |
|---|---|---|
Access | Anywhere your credit card is accepted. | Retailers that partner with BNPL platforms |
Payments | Monthly | Bi-weekly, monthly |
Time to repay | Typically 3-18 months | Typically 2-48 months |
Fees | 2%-8% of the purchase amount | Usually none, unless you miss a payment |
Interest rate | 0%-8.99% | 0%-36% |
Credit check? | No | Occasional soft credit check. |
Credit cards that offer installment plans
Not every credit card provider offers an installment plan. Here are some of the providers and plans available.
CIBC Pace It
CIBC Pace It offers six-, 12- and 24-month term installment plans, with interest rates that range from 6.99%-8.99%..There is a one-time installment fee of 2% of the purchase amount. To qualify for aCIBC Pace It installment plan, you must have an eligible CIBC credit card in good standing, be registered for CIBC banking and have an eligible qualifying purchase of at least $100.
American Express Plan It
American Express Plan It is a credit card installment plan with added flexibility — you can set it up for a single purchase from your most recent charges, or apply it to a portion of your statement balance. Either way, the minimum is $100, and you’ll pay a monthly fee on the principal amount. Purchase installment plans are available in three-, six- or 12-month terms. Plan It is offered on a number of personal and small business American Express cards, though it's currently not available to Quebec, Nova Scotia, PEI, or Nunavut residents.
MBNA Payment Plans
Almost all MBNA credit cards are eligible for MBNA Payment Plans. The purchase must be at least $100 and plans are available in six-, 12- and 18-month terms. There are no interest charges on what you borrow, but a one-time plan fee of 4% to 8% of the purchase amount will be added to what you owe.
Triangle Mastercard
Although the installment financing options with a Triangle Mastercard are limited to stores owned by Canadian Tire (including SportChek, Mark’s, Atmosphere, Hockey Experts, etc.), you’ll pay no interest or fees on qualifying purchases of $150 or more. Payment terms are less flexible — the only option is a 24-month term — but you do earn CT Money on what you repay.
Scotia SelectPay
Many Scotiabank personal credit cards are eligible for Scotia SelectPay, but the purchase amount must be at least $100. Additionally, you must have a Scotia online or mobile banking account. You can choose from three-, six- or 12-month terms and you’ll pay a special low interest rate on what you borrow.
Is using a credit card installment plan worth it?
Installment plans can be useful when a large or unexpected expense comes up. They can help you save money on interest charges if the program offers a lower fee or rate, and your only alternative would be to put the purchase on your credit card. That said, using an installment plan will reduce your available credit, and you’ll likely still pay more in the long run than if you paid the entire purchase amount upfront.
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