Thanks to installment terms, credit cardholders can have, say a new television and pay only 1/12, even 1/24 of the cost. Just swipe that plastic and start watching your favorite shows in the biggest screen and best resolution your credit card can buy. What’s more, special promotions like 0% installment schemes have really made deferred payments quite irresistible.
But wait – credit cards have also began offering Pay Later. Should you bite?
Before you start shopping, it might be helpful to first understand the three payment schemes being offered out there.
1. Zero percent interest installment plan.
This is probably one of the best installment plans available in the market today, since it allows you to pay for your transaction in equal tranches without having to pay for interest. However, it may not cover all kinds of transactions and may not cover all the products sold in a store so check before you swipe.
2. Regular installment plan.
In this scheme, payments can be spread out over a period of time, with interest charges. The interest may vary depending on the length of the transaction and from one credit card issuer to another.
3. Pay later installment plan.
Under this plan, the monthly installment due on the transaction and the monthly interest will be billed to the cardholder starting on as late as the third monthly billing statement cycle after the original transaction date. This means that if you do your shopping in December, you will be making payments only in March, instead of January. This is a great option to use if you know that your cash flow for the immediate term will be tight.
Now that you know your options, here’s how to use these deferred payment schemes to get the most bang for your buck:
Forecast your cash flow.
Before any purchase, make sure to consider your cash flow. How much can you realistically afford to pay in a month for your purchase? Remember that if you opt for a shorter payment term, you will pay less interest but higher monthly costs. While a longer tenor will be easier on your pocket, it can also incur higher interest.
Choose the plan that is best for your needs.
Assuming all of the above options are available, consider which of the different installment schemes being offered matches your requirements. If you have a cash flow concern and would be more comfortable making your first installment payment in the future, instead of next month, then avail of the pay later installment plan if it is available. If you are more concerned about the amount of interest that you will have to pay, then the zero percent interest plan is appropriate for your needs. If you would rather spread out payments over a long period and are willing to pay interest charges, then check out the regular installment plans.
Set a budget.
It’s tempting to shop when you know that you can defer payment and pay in installment. However, all these transactions do add up. If you lack discipline or planning, using the deferred payment option could lead you to overspend and may break your budget. Whether it’s zero percent or regular installment, even pay later – don’t forget, you still need to pay.
Ask and you will receive answers.
If you are unclear about the terms of the installment plan that you have chosen, do not hesitate to ask for an explanation from the merchant or the issuer of your card. By asking, you may even come across other payment options that are more attractive and practical for you.
Watch out for seasonal promotions.
Occasionally, credit card issuers offer promotions where they further sweeten the deals that they offer. Discounted products or services may be offered on installment, or gifts with purchase, or your credit limit may even be increased. If you enjoy shopping on installment, make sure you keep an eye out for these offerings from time to time.
Department stores, groceries, car dealers, service centers, and boutiques, among many others, now offer Pay Later options so make sure to check your payment options before you make the purchase to get the best value for your hard earned money.
source: www.abs-cbnnews.com
