Credit Card Installment: How It Works, Advantages, and Disadvantages

Ricky Publico

Ricky Publico

Last updated September 23, 2022

Credit cards offer numerous perks such as exclusive discounts and privileges and installment payment plans. These credit card installment plans usually come with little to no interest, longer repayment periods, and equal monthly payments. Most banks in the Philippines even offer a payment term of your choice to sweeten the deal.

But is it really a good idea to avail of a credit card installment plan? Should you extend your credit card payment and stay in debt longer? When is credit card installment beneficial? 

In this article, we’ll answer all your burning questions about credit card installment, including its pros and cons, before you use it to pay for your next purchase.

What is a Credit Card Installment Plan?

A credit card installment plan is a scheme that enables cardholders to pay for their purchases in equal amounts monthly. Instead of making a one-time cash payment or a straight payment with your credit card, you pay an equal amount for a certain number of months. 

You can choose to pay in fixed payment terms of three, six, 12, or 24 months. This allows you to divide the entire purchase amount depending on your preferred installment term. 

Note that a credit card installment plan is not the same as a Buy Now, Pay Later (BNPL) plan. However, some credit cards offer a BNPL feature, with which you can choose to defer your payment for up to 90 days. 

How Does Credit Card Installment Plan Work in the Philippines?

credit card installment - how credit card installment works

A credit card installment plan is a popular payment option for those who may not have enough money to pay for their purchases in cash. For instance, you need a new inverter refrigerator that costs ₱25,000, but you don’t have enough cash to make an outright purchase. You can charge it to your credit card, choose a payment term that works for your budget, and pay for it in installments. 

The merchant will swipe your credit card and set up the installment payment scheme. Before completing the transaction, the merchant will inform you of your monthly payment amount. Once you agree to the payment terms, the transaction will be confirmed and the purchase will be processed. 

What Can You Buy On a Credit Card Installment Plan?

One of the most attractive features of credit cards is the credit card installment plan, which allows you to buy items that cost a bit of money through split payments. You can purchase high-value items like home appliances, furniture, and gadgets and pay in affordable installments. 

Moreover, you can make a straight charge on your credit card to purchase plane tickets, for example, and convert your payment into affordable monthly installments. 

What are the Pros of Credit Card Installment Plans?

There are many credit card installment benefits. Here are just some of them:

Buy Expensive Items

credit card installment - appliance purchase

Credit card installment allows you to buy big-ticket items without draining your cash flow. The goal is to save the cash you have on hand and spread out payments over three to 24 months. So if you’re going to buy a new phone that costs ₱50,000, you’ll pay ₱4,168 every month for 12 months. 

By opting for a credit card installment, the partner merchant can process everything for you. All you have to do is wait for the first installment to be posted on your billing statement and pay on or before the due date.

Use Your Cash for Other Purposes

Cash is king, so it’s good to have it readily available for any financial emergencies. Without cash, you’d be tempted to borrow money even with high interest and fees. 

With credit card installment plans, however, you can leave your cash untouched. You can use it for business or other more urgent expenses.

Earn Rewards Points

Although not all credit cards let you earn points from installment plans, most still allow you to rack up points for direct or installment purchases. Before heading to the store, call your credit card provider and confirm if your installment purchase can qualify for the bank’s regular rewards program. 

Enjoy Deferred Payments

Instead of saving up for several months just to purchase something, you can simply avail of a credit card installment with payment terms that you can afford. 

As mentioned, some banks also offer the  BNPL option. This feature also allows you to grab great limited-edition deals and pay for them at a later date. 

Secure Shopping Experience 

credit card installment - Secure Shopping Experience

While neither is a pleasant situation, losing your credit card is less risky than losing a large amount of cash. There’s a slim chance of retrieving stolen cash, but unauthorized purchases on your credit card can be investigated and reversed.  

No Need for a Down Payment

Unlike installment plans offered by lending companies where you have to pay an initial amount of up to 20% of the purchase price, you don’t need to make any down payment with credit card installment plans. 

What are the Cons of Credit Card Installment Plans?

There's also a bad side to credit card installment plans. Keep these in mind:

No Rewards for Installment Purchases

credit card installment - disadvantages

Depending on the credit card, most issuers don’t allow you to earn points with installment purchases. If you’re a reward-seeker, then credit card installment plans probably won’t be your thing. After all, since your bank will shoulder the full expense, you essentially owe them money. Why would they reward you for that? Sadly, you can’t have your cake and eat it, too. Consider this when you’re thinking of going this route.

Another Monthly Payment to Worry About

Before availing of credit card installment plans, assess your ability to juggle monthly payments. Don’t risk it if you think you’re not ready for it. Consider the number of bills you’re currently paying. You’ll always have utility, internet, and phone bills to worry about. Can you afford to worry about another set of monthly bills? 

Your Financial Future is Uncertain

Nobody knows what the future holds. You can’t predict the next emergencies that might hinder you from paying your installments. This may include medical expenses, unemployment, or bad business profits. If you don’t feel confident about your financial capacity one month from now, avoid credit card installment plans for a while.

Purchase Can Become More Expensive

Although credit cards usually offer 0% interest on installment plans, there are instances when you still need to pay processing fees and interest. Some stores even offer different pricing for cash or straight purchases versus installment purchases. Credit card issuers may also charge early processing fees if you opt to pay for installment charges before the end of its term.

What are the Best Credit Card Installment Plans?

Credit card issuers in the Philippines offer installment plans with different terms and conditions. Here are a few of the best installment plans to consider when you’re choosing a credit card:

Citi PayLite

credit card installment - citi paylite

Citi PayLite is Citi’s credit card installment plan. It offers flexibility when it comes to types of purchases and payment terms. This program is open to locally issued Citi credit cards with good credit standing.

Citi PayLite’s partner merchants include schools, appliance centers, lifestyle shops, sports brands, insurance companies, and even hospitals. Here are some of them: 

  • Abenson
  • Electroworld
  • Huawei
  • Lenovo
  • Power Mac center
  • Ace Hardware
  • SM Department Store
  • Robinsons Department Store
  • Rustans
  • Makati Medical Center
  • Medical City
  • Bench
  • Adidas
  • De La Salle University
  • Miriam College
  • University of Santo Tomas

When it comes to payments, you can choose from three, six, nine, 12, 18, 24, or 36 monthly installments. To avail of Citi PayLite, you must have a minimum purchase of ₱3,000. Nevertheless, note that the installment term and required purchase amount will ultimately depend on the partner merchant.

Note: This product is sold by Union Bank of the Philippines, using certain trademarks temporarily under license from Citigroup Inc. and related group entities.

🎁 Get a Free Welcome Gift from Moneymax!

moneymax citibank dolce gusto gcash promo

On top of the convenience and flexibility of paying for purchases in installments, you can also get an exciting freebie when you get a credit card from Citibank! 

Just apply for any Citi credit card through Moneymax and meet the minimum spend requirement of ₱10,000 within 60 days from your card approval date. Choose your preferred welcome gift: a free Nescafe Dolce Gusto Piccolo XS coffee machine (worth ₱5,199) or free ₱5,000 GCash.

The Moneymax Citibank Dolce Gusto/GCash promo runs until September 30, 2022 only. So hurry and apply now!

Note: This product is sold by Union Bank of the Philippines, using certain trademarks temporarily under license from Citigroup Inc. and related group entities.

HSBC Credit Card Instalment Plan

credit card installment - hsbc credit card installment plan

Use your HSBC credit card to purchase costly items online or in-store at 0% interest for up to 36 months.[1] No need to pay for additional costs―HSBC doesn’t charge interest. But there’s a minimum spend requirement for the installment plan depending on the merchant. 

For example, if you’re buying at Abenson, HSBC allows split payments on the following conditions:

  • Three and six months installment = minimum purchase of ₱3,000
  • 12 months installment = minimum purchase of ₱6,000
  • 24 months installment = minimum purchase of ₱18,000

If you’re an HSBC credit cardholder with good credit standing, you’re eligible for this bank’s credit card installment plan.

Read more: What is the Perfect HSBC Credit Card for You?

BPI Special Installment Plan

credit card installment - BPI installment plans

Bank of the Philippine Islands (BPI) has an installment program called Real 0% Special Installment Plan (SIP). With this, you can get up to 36 months real 0% interest when you purchase from the bank’s partner merchants.  

If you’re more of an online shopper, BPI’s Online Special Installment Plan is worth checking out. You can enjoy 0% installment with the bank’s online partner merchants.[2] Available terms, however, may depend on the merchant. Participating brands include Power Mac Center, Anson’s, Abenson, Call to Deliver, ShopSM, Henry’s Cameras, Trunc, Standard Insurance, and Ergo. 

BPI credit cardholders with good standing are also qualified for the Bonus Madness Limit. This is a bonus installment credit limit of up to 100% of the regular credit card limit

Related: BPI Credit Card Promo Offers: Check Out These Shopping, Lifestyle, and Travel Deals

Metrobank Merchant Installment Program

If you’re the type of credit card user who puts a premium on lavish and modern living, you’ll find Metrobank’s credit card installment program exciting and useful. The bank has partnered with a wide range of home and lifestyle merchants, such as appliance centers, gadget stores, and even nail salons!

Enjoy 0% installment at the following merchants: Robinsons Appliances, Gigahertz, Datablitz, Automatic Centre, Abenson, Samsung, SM Markets, Ayumi Japan Eyelash and Nail Art, and Pacific Cross.[3]

RCBC Unli 0% and Unli Installment Programs

credit card installment - rcbc 0% unli installment

If you’re looking for a credit card installment plan that doesn’t require any minimum spend, then use an RCBC credit card.

RCBC offers UNLI 0% and UNLI Installment[4] options, both of which can be availed of with no minimum spend and as often as you wish. You can convert all your overseas purchases, too.  

Go for UNLI 0% if you plan to keep your payment term short. This lets you enjoy 0% installment for three months.

On the other hand, apply for UNLI Installment for longer payment terms of up to 36 months. Interest rates are only minimal.

Read more: 15 Exciting RCBC Credit Card Promos You Shouldn’t Miss

UnionBank’s Inhouse Installment Facility

Inhouse Installment is UnionBank credit card’s installment program. Through this, you can buy big purchases and enjoy lighter monthly payments. This particular program has the following features:

  • EasyConvert – Whether you’re buying groceries or a brand-new TV, use this feature to convert your straight purchases into fixed monthly installments.
  • EasyCash ­– Got an emergency? Convert your credit limit into cash that you can use for unexpected expenses. You’ll then pay the loaned amount in monthly installments.
  • EasyTransfer – This feature is designed to make credit card debt payments much easier. EasyTransfer allows you to transfer your other credit card balances to your UnionBank credit card and pay for everything in monthly installments.

Note: Keep in mind that all Inhouse Installment requests are subject to the bank’s approval.

AUB Flexi Pay and Post Pay Installment Programs

You shouldn’t be sleeping on Asia United Bank (AUB)’s credit cards. Their benefits and perks can go toe to toe with those of bigger banks. That includes its credit card installment program.

AUB’s credit card installment program includes the following features:

  • Flexi Pay Installment – Use this to avail of 0% interest on installment terms of up to 36 months.
  • Post Pay Installment – This lets you convert your straight purchases with your AUB credit card into installments with low interest rates.
  • Balance Transfers – Use this to consolidate credit card debts. You can transfer your other credit card balances to an AUB credit card and pay the total balance in installments at low interest rates.
  • Cash Out Installment – Need quick cash for unforeseen expenses? Get cash using your AUB credit card and pay the amount in installments at low interest rates.

Security Bank Credit Card Installment Plans

Security Bank’s credit card installment program offers features that make payments simpler and lighter. Check out the following:

  • ChargeLight – Convert your transactions into light installments with a 1.00% add-on rate regardless of your chosen payment term. Choose from three, six, nine, 12, 18, or 24 monthly payments.  
  • SimplyPay –  Use your Security Bank credit card to pay bills and other expenses that require a bank deposit, such as school tuition, professional service fees, and rent. The add-on rate is 1.00% regardless of your chosen payment term. Choose from three, six, nine, or 12 installment payments.
  • Ready Cash – This allows you to convert your available credit limit into cash and pay in monthly fixed installments. You can use this for emergency expenses. The interest rate is 1.00% regardless of the chosen installment term. Available payment terms include three, six, nine, 12, 18, and 24 months.   
  • Balance Transfer – Pool all your credit card debts together and transfer them to a Security Bank credit card. Pay the total balance in installments at a 1.00% add-on rate regardless of the chosen payment term. Installment terms include three, six, nine, 12, 18, and 24 months.
  • Bills Assist –  This consolidates all your utility bills, so you’ll have to remember only one due date. Accepted bills include Meralco, Globe, PLDT, Sun Cellular, Cablelink, SkyCable, and Innove.

Robinsons Bank Credit Card Installment Plans

Robinsons Bank’s credit card installment plan makes shopping and debt payments easier with the following features:   

  • Convert to Cash – Convert your available credit limit into cash to pay for your needs. You can choose to receive the proceeds via your savings account or checking account.
  • Balance Transfer – Transfer your other credit card balances to your Robinsons Bank credit card and pay the new balance in monthly installments.
  • Transaction Conversion – Convert your straight payment with your credit card into monthly installments. The required minimum purchase is ₱3,000.
  • Balance Conversion – If you have a large credit card balance, you can convert it into monthly installments for easier payment.

Credit Card Installment FAQs

Check out the following if you want to learn more about credit card installment plans:

1. How do you apply for a credit card installment plan?

Applying for credit card installment is easy because partner merchants can automatically convert your purchase into split payments of your choice. However, for other types of installment promos, reach out to your bank to request an installment plan. 

To make sure you can avail of a credit card installment plan, make sure you:

  • Have no outstanding or unpaid balances
  • Did not max out your credit limit
  • Have enough credit card balance to cover the purchase amount
  • Can pay the monthly charges
  • Agree to the terms and conditions and pay all related costs and charges

2. How do you pay your credit card installment?  

Since the price of your purchase is divided into installments, it becomes part of your monthly credit card bill until it’s paid in full. You have a few options when paying your credit card installment:

  • Over-the-counter transactions at the bank (cash or check)
  • Over-the-counter transactions at the bills payment center
  • Auto-debit arrangement
  • Online banking
  • Mobile banking
  • Mobile wallet apps (e.g., GCash, Maya, or Coins.ph)

3. Can I pay my credit card installment in advance?

Yes. Doing so will help you save money on interest, fees, and other charges.


Final Thoughts

Just like most things in life, credit card installment plans come with their own set of pros and cons. The challenge now is to determine how you can use it to your advantage. 

If you have a regular source of income, then avail of a credit card installment plan for your purchase. However, if you think your sources of income are unstable, then you may not want to take the risk and just pay in cash. 

Weigh your options and consider possible scenarios before you get an installment plan. This should apply to any financial decision you’ll make.

If you’re looking for credit cards that offer installments, compare your options using the Moneymax platform. Once you’ve found the card for you, apply for it right away.

Compare credit cards with Moneymax

Sources:

Ricky is the zaniest Product Marketing Manager at Moneymax, with over six years of writing experience in the digital marketing industry. He had written for SEO, cybersecurity, and other related industries prior to joining Moneymax. He also specializes in content writing, copywriting, and email marketing. He is a huge fan of pro-wrestling, One Piece, and smartphones in general. Follow Ricky on LinkedIn.