Credit card instalment plans: Split your bills, ease your wallet, and keep the fun rolling

What is a credit card instalment plan?

An instalment plan gives you a structured way to pay off what you owe in equal amounts, over a fixed period of time. This structure is common with buy now pay later (BNPL) services and is also offered on some credit cards as a way to help you plan for repayments.

Most credit card instalment plans also offer lower interest rates than the card's standard purchase rate, which means you could save on interest as well.

How do credit card instalment plans work?

Credit card instalment plans usually need to be set up or requested through Internet banking or your credit card's mobile app. Once you've done that, you'll pay a fixed amount off the balance when a payment is due – instead of paying some or all of your balance at the end of a statement period.

Depending on the credit card, you could set up an instalment plan for your entire account balance, part of your balance or for specific purchases. For example, if you have a Westpac credit card, you could use the SmartPlan service to set up an instalment plan for either a large purchase (over $500) or for a portion of your outstanding purchase, cash advance or balance transfer balance that’s worth more than $200.

What types of credit card instalment plans are available?

While some providers offer instalment plans for any credit card, others offer this type of repayment option for specific purchases at participating retailers. You can use this table to compare the types of instalment plans available through different credit card companies and cards.

Pros and cons of instalment repayments

Example: Paying off credit card debt with an instalment plan

To give you an idea of how credit card instalment plans work, let's say we have just used a credit card to pay for a $3,000 holiday package. We can’t afford to pay this off in one go, so we decided to set up an instalment plan to help budget for the repayments.

In this scenario, we're given three different instalment terms to choose from, each showing how much the fixed repayments will be worth:

• 6 months with repayments of $500 per month
• 9 months with repayments of $333.33 per month
• 12 months with repayments of $250 per month

In this case, all of the instalment options offer 0% interest on the debt as long as we meet the repayment terms. So, if we knew we could afford to put $250 per month towards this trip, we would choose that option.

As most credit card instalment plans can be cancelled early without extra fees, we would also have the option of paying it off sooner if we found we could afford it.

What else do I need to know about credit cards with instalment plans?

Keep these features in mind to decide if a credit card that offers instalment plans will work for you:

• Annual fee. Remember to weigh the credit card’s annual fee against its benefits to decide if the account will be worth it for you.
• Interest rates. Make sure you check all the interest rates charged by the card, keeping in mind that some instalment plans may offer 0% interest for a fixed period of time before a higher rate applies. Also remember that interest may still be charged on any other balance that’s not included in the instalment plan.
• Additional fees. Depending on the card, fees for late payments, missed payments or for establishing an instalment plan may apply.
• Payment requirements. If you set up an instalment plan, you’ll need to make repayments at the specified rate for that plan. But if you have a balance that’s not included in your instalment plan, you may need to pay more than the fixed amount in order to cover your account’s minimum repayment requirements. So carefully read through the details of each balance and check your statement to make sure you know exactly how much you need to pay by the due date.
• Eligible balances. Credit card instalment plans may only be available for specific types of payments or balances, such as individual purchases over $500 or balance transfer balances. This could mean not all of the balance on your credit card is included in the instalment plan. So remember to check what debts will be eligible for instalment repayments and decide whether this option will work for you.
• Cancelling instalment plans. Each credit card that offers instalment plans will have different terms and conditions around cancelling the plan. Usually, repaying it before the end of the plan is fine. Some plans, such as Westpac’s SmartPlan, also allow you to cancel instalments at any time without additional charges.

What other repayment options can I consider?

As well as instalment plans, you could choose to pay off your credit card debt using one of the following options:

• Regular repayments. Regular credit card repayments are due at the end of your statement period and usually require a minimum of 2-3% of your closing balance. This gives you the flexibility to vary how much you repay based on your financial needs.
• Automatic payments. Most cards offer automatic repayments similar to direct debits. Depending on the credit card, you could choose to have the minimum amount, the total owed or a dollar amount of your choosing automatically deducted from your nominated bank account.
• Balance transfers. If you already owe a lot on your credit card and are worried about interest costs, another option is to get a balance transfer credit card that offers a promotional 0% interest rate during the introductory period. Just remember that you’ll have to budget for repayments yourself, rather than relying on an instalment plan or the minimum repayment amount. Otherwise, a higher rate will apply to the balance at the end of the introductory period.
• Personal loans. Personal loans usually offer structured repayment plans that allow you to pay off your debt over a fixed term. This is similar to a credit card instalment plan, except that your personal loan will be closed when you have paid it in full, while your credit card account remains open until you choose to cancel it. Still, you may want to consider this option if you already owe a lot on your card and want more structure for paying off the debt.

Getting a credit card that offers instalment plans gives you another way to structure your repayments and manage your budget. Just remember to consider the requirements of the instalment plan carefully before you apply and weigh up other repayment options so that you can find one that suits your needs.

Written by

Amy Bradney-George

Editor

Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full bio

Amy's expertise

Amy has written 565 Finder guides across topics including:

• Credit cards
• Frequent flyer
• Credit score
• BNPL
• Money management
• Sustainability