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A Few Things About Interest-Free Installment Credit Cards

The way we take our day-to-day decisions is influenced heavily by the timing of those decisions. Take, for instance, home renovation. You are probably thinking of renovating your home right now because you have the time for it. Who knows what you will be doing a year from now? You may have the budget you need after a year’s savings, but not the time nor the inclination to start such a hefty endeavor. Thus, while making certain decisions, getting the timing right is everything. And as far as money goes, well, this is exactly what interest-free installment credit cards are for.

The influx of BNPL payment options in Singapore

As the e-commerce sector in Singapore is witnessing a boom, industry leaders such as Lazada have collaborated with almost all major banking and financial institutions to come up with alternative payment solutions for their online users. Interest free installment credit cards are just one of the many similar plans that have been introduced as a result of the growing tilt towards ‘Buy Now Pay Later’ payment options.

What’s the utility of an interest free installment credit card?

A little monetary help can go a long way in getting you what you want when you want it. Whether it is something simple as getting a new phone or something more elaborate like a home renovation, you no longer have to wait for your savings to grow in order to check your bucket list.

By getting an interest free installment credit card, you would be making the payment through equal monthly installments, instead of paying the entire amount upfront. These are easy-to-use credit cards that extend you the necessary line of credit, enabling you to purchase the things you need, when you need them, and not when you can afford them.

How does interest free installment credit cards work?

If you are paying your purchase invoice via an interest free installment credit card, there are usually three parties involved in this transaction:

  • You (the buyer)
  • The merchant(the seller or the e-commerce platform or physical store from where you are buying the product/service)
  • The bank or the financial institution( the entity that has issued you the credit card)

Suppose you have purchased a new iPhone from Lazada and you have chosen to pay for the phone via interest free installment credit card. Then the process of the execution of this transaction would be as follows:

  • The bank or the financial institution that has issued you the credit card will be paying the entire price of the product to Lazada upfront, at the time of the purchase itself.
  • The total amount on the purchase invoice would be subtracted from your credit limit. Hence, your credit limit will go down by the entire amount of the purchase, right away.
  • As you will pay back the bank via interest free installments every month, gradually your credit limit will be restored, installment-by-installment.

Advantages of interest free installment credit card

There are several benefits of adopting a ‘Buy Now Pay Later’ payment option, but it is particularly beneficial to use an interest free installment credit card:

  • zero interest

This is one of the most obvious benefits of this payment option. You can split the cost of your purchase bill into smaller, affordable installments, payable over an extended period. And you don’t have to pay any additional interest on it, as long as you are purchasing from a particular online platform or store, like Lazada.

  • Improve your credit score

Credit ratings are essentially a rating that is provided to you based on your credit behavior. Timely repayment of credit is one of the biggest factors that may impact your credit ratings. Therefore, by choosing an interest free installment credit card as your payment option, and paying your installments on time, you would be able to gradually build and/or improve your credit score.

Is it possible to get an interest free installment plan without a credit card?

Many leading players in the e-commerce sector like Lazada have come up with several BNPL plans recently. These plans offer interest free installment plans. However, consumers can only access these plans if they are purchasing from that particular e-commerce platform, like Lazada. Certain sellers also provide their customers with the option of getting the product in interest free installments. A good example of this is Apple. Users can buy the new version of the iPhone by paying through interest free Apple card monthly installments.

Takeaway

If you are purchasing directly from the seller and there are no interest-free installment plans that you can directly avail of, then getting such a plan could be tricky without a credit card. There are not that many options. Thus, if you happen to have a credit card, which 3/4th of the Singaporean population apparently does, then we would recommend you to opt for an interest free installment credit card, as it is a significantly better option.