Big-ticket purchases can get expensive, especially if you pay them in cash. However, there are plenty of “buy now, pay later” schemes that allow you to purchase high-ticket items without paying immediately. One of these schemes is the 0% interest installment plan for purchases made using a credit card.
Credit cards with no interest mean you don’t have to pay interest on purchases charged to it for a specific period. This period is typically between six to 36 months, depending on the bank. Once this period ends, your card’s regular interest rate will take over. You will also pay interest on other types of credit card transactions such as cash advances, overlimit, late payment, and balance transfer unless stated in the terms and conditions.
Credit cards with no interest can be a great way to finance high-ticket purchases without shelling out a huge amount upfront. However, you have to keep up with your monthly payments to make sure you won’t incur hefty charges that may cost you more money in the long run.
Choosing the Right Zero-Interest Credit Card for You
A credit card, even with a 0% installment plan, isn’t one size fits all. To know which card may suit you and your needs, consider the following:
A card with a 0% installment features will allow you to fund a high-ticket purchase or an emergency expense. It lets you divide the amount into monthly payments. Determine how long you need to pay off your credit card debt and compare it with the 0% interest installment period offered by the bank. Choose a credit card that offers a zero-interest installment plan that fits your finances. Otherwise, you may have to pay for interest charges once the installment period ends.
For example, you need 12 months to pay the debt in full, but the credit card only offers a six-month 0% installment plan. You may have to pay the monthly interest rate for the remaining six months.
Monthly interest rate
Once the 0% installment period is up, you would have to pay for your credit card’s monthly interest charge. This could be anywhere between 3% to 3.5%. Determine the card’s interest rate and crunch the number to know how much you have to pay, including the monthly interest charge. This way you can better manage your credit card bills.
Cash advance fee: 5% of the amount withdrawn or PHP 500, whichever is higher
Credit cards with no interest may not have the same features as other cards in the market. Reward programs may vary, for example. Explore your credit card options and compare their benefits to know which one suits you best. Make sure to read the fine print and contact the bank if you have any questions or concerns about the credit card.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.
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