Credit Card Instalment Plans

Pauline Hatch     

We’ll break down each of the credit card instalment plan options currently offered by providers here in Australia. We’ll look at how they work, how much they cost, and whether they're worth using, so you can decide whether they'll would work for you.

Which credit cards offer instalment plans?

With the introduction of buy now pay later services such as Afterpay, credit card instalment plans are becoming increasingly popular. Instalment plans allow you to spread the cost of your purchase over weeks or months, so you can pay it off in manageable chunks while paying less in interest. You'll get more flexibility in a credit card plan than a Buy now pay later plan.
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What is a Credit Card Instalment Plan?

While each provider’s instalment plan offering varies, the fundamental idea behind each plan remains the same, in that it allows cardholders to break down the cost of their purchases into more manageable instalments. So, instead of having one large payment due at the end of the statement period, that debt can be paid off in smaller chunks over a longer period of time.

With an instalment plan in place, you can:

  • Save on interest: You won’t be charged the normal interest rate from your credit card. Instead, you’ll pay a lower rate (or even none) and sometimes a small monthly fee.
  • Lower your stress: Instead of feeling overwhelmed by your credit card debt that follows you month after month, you pay it off in small, manageable chunks. 
  • Pay flexibly: Depending on the plan, you may be able to have multiple plans on the go at once to help manage your repayments. You can often change the length of your plan and pay it off early without penalty.

Let's look at how it might work with an example.

  • Isla pays for a new lounge on her credit card. Since it’s a large purchase and she might not have the cash to pay the card off fully when the statement comes in, she sets up an instalment plan. She chooses to pay the $500 lounge off in 3 repayments over 6 weeks instead.
  • Ash has an unexpected bill come in, so he creates an instalment plan to pay off his credit card balance of $1,500. That way he can pay down his balance over 4 months, and pay less interest than than if he were to carry over his balance and only pay the minimum.
  • Zahid uses his card to withdraw $600 at the ATM. He realises he won’t be able to repay the withdrawal as quickly as he thought, so he decides to create an instalment plan. He’s still paying interest, but it’s at a much lower rate than the standard cash advance rate he would have been paying on the withdrawal.

 

Which Cards have Instalment Plans?

Now we know how instalment plans work in theory, let’s look at how they work in practise by digging deeper into each provider’s instalment plan offering.

American Express

  • Eligibility: Available to all American Express cardholders, except those with Corporate, Small Business, Charge cards, and David Jones branded credit and store cards.
  • Plan It Feature: Allows you to move recent transactions and new purchases to an instalment plan with 0% p.a. interest.
  • Setup: Log in to your online account or American Express App, choose a transaction from your new purchases or most recent statement (minimum $100), and select the plan duration (3, 6, 9, or 12 months).
  • Fixed Monthly Fee: You will pay a fixed monthly fee, determined by the type of card you hold and the plan amount.
  • No Fixed Maximum Amount: There is no fixed maximum amount you can plan, but the plan must consist of new purchases from your most recent statement.
  • Multiple Plans: You can have multiple plans at once, but the total amount of all plans must be within your credit limit.
  • Ineligible Transactions: Balance transfers, cash advances, fees, interest, and balances on a promotional rate are not eligible.
  • Interest-Free Days: You can keep your interest-free days on new purchases if you pay your closing balance by the statement due date.
  • No Changes: You cannot make changes to a plan once it’s been created.
  • Cancellation: You can cancel a plan at any time without early repayment fees. The remaining amount will go back to your card balance.
  • No Extra Payments: You cannot make extra payments towards your plan balance. Any extra payments will be applied to your standard balance.

Are instalment plans cheaper? Let's look at Fictional Lee's example.

Lee uses his American Express card to purchase flights for $2,000. He decides to set up a Plan It instalment plan on that purchase, so he checks out his plan options over 3, 6, 9, and 12 months.

  • 3 months: Lee would pay $666.67 each month, plus a $23.80 monthly fee. Overall, his fees would come to $71.40.
  • 6 months: Lee would pay $333.34 each month, plus a $23.80 monthly fee. Overall, his fees would come to $142.80.
  • 9 months: Lee would pay $222.22 each month, plus a $23.80 monthly fee. Overall, his fees would come to $214.20.
  • 12 months: Lee would pay $166.67 each month, plus a $23.80 monthly fee. Overall, his fees would come to $285.60.

How would this compare to paying off his $2,000 purchase on his card as normal? Let’s assume his card features a purchase rate of 23.99% p.a. and there are no other purchases owing.

  • 3 months: Lee would pay $687 each month, with a total interest cost of $61. This comes to $9.60 less than when using Plan It.
  • 6 months: Lee would pay $365 each month, with a total interest cost of $133. This comes to $9.80 less than when using Plan It.
  • 9 months: Lee would pay $251 each month, with a total interest cost of $212. This comes to $2.20 less than when using Plan It.
  • 12 months: Lee would pay $199 each month, with a total interest cost of $280. This comes to $5.60 less than when using Plan It.

So, what if you had a larger amount to pay off?

Gina buys a new lounge set for $8,000 using her Amex with a 23.99% p.a. purchase rate.

  • 3 months: Gina would pay $2,666.67 in Plan It monthly instalments, plus a monthly fee of $83.20 (paying $249.60 in fees overall). Paying off that amount outside of Plan It, she’d pay $2,787 each month, including $361 in interest overall. In this example, using Plan It would cost $111.40 less.
  • 6 months: Gina would pay $1,333.34 in Plan It monthly instalments, plus a monthly fee of $83.20 (paying $499.20 in fees overall). Paying off that amount outside of Plan It, she’d pay $1,463 each month, including $785 in interest overall. In this example, using Plan It would cost $285.80 less.
  • 9 months: Gina would pay $888.89 in Plan It monthly instalments, plus a monthly fee of $83.20 (paying $748.80 in fees overall). Paying off that amount outside of Plan It, she’d pay $997 each month, including $1,199 in interest overall. In this example, using Plan It would cost $450.20 less.
  • 12 months: Gina would pay $666.67 in Plan It monthly instalments, plus a monthly fee of $83.20 (paying $998.40 in fees overall). Paying off that amount outside of Plan It, she’d pay $810 each month, including $2,059 in interest overall. In this example, using Plan It would cost $1,060.60 less.

It’s worth pointing out that fees charged on each Plan It plan vary according to the type of card held. We used the Plan It calculator on the American Express site as a guide. You may pay more or less in fees, depending on your card.

Bankwest

Bankwest offers its Easy Instalments feature to all Bankwest credit cardholders. Here’s how it works.

  • Eligibility: All Bankwest credit cardholders can set up an Easy Instalment plan for purchases between $100 and $10,000.
  • Setup: Plans can be set up through the Bankwest App under the "Offers" section.
  • Repayment Schedule: Bankwest will provide details of the plan within 2 business days, including the repayment schedule and any interest or fees.
  • Credit Limit: The amount held within a plan counts towards your overall credit limit.
  • Interest-Free Days: You can still benefit from interest-free days on new card purchases if you pay your monthly instalment amount and the full closing balance outside of those instalments by the statement due date.
  • Eligible Transactions: Cash advances, gambling transactions, balance transfers, purchases on a promotional offer, and purchases made more than 30 days prior are not eligible.
  • Extra Payments: You can make extra payments towards your plan, but any balance outside the plan will be paid first.
  • No Obligation: There is no obligation to make the monthly instalment payment, but any missed payments will revert to the standard purchase rate.

 

BOQ

BOQ provides 3 types of instalment plan to its credit cardholders, which include Statement Instalment, Transaction Instalment and Cash Instalment plans.

  • Types of Plans: BOQ offers Statement Instalment, Transaction Instalment, and Cash Instalment plans.
  • Eligibility: You can spread the cost of your entire credit card balance, just one purchase, or a cash advance.
  • Personalized Fixed Rate: Plans feature a personalized fixed rate and are created over a set term ranging between 1 and 5 years.
  • Minimum Amounts: The minimum amount for a Statement Instalment or Cash Instalment is $500, while for a Transaction Instalment it is $50.
  • Multiple Plans: You can have multiple plans at once, as long as the total doesn't exceed your overall credit limit.
  • Interest-Free Days: You can continue to benefit from interest-free days on purchases as long as you pay your closing balance in full by the statement due date.
  • Fees and Interest: Aside from the fixed interest rate, you may also pay an Instalment Plan fee, with details specified in the offer BOQ sends you.
  • Missed Payments: If you fail to pay the monthly instalment by the due date, interest on that amount will be applied at the card’s purchase rate, and BOQ may choose to cancel the plan, reverting the balance to the card’s applicable rate.
  • Plan Changes: You can change the term of your plan, which will change your instalment amount, and you can pay off your plan at any time with no fees.

 

Citi

Like buy now pay later, but for anything, Citi offers 3 Citi Instalment Plans to its credit cardholders.

  • Citi PayLite: Convert a purchase of $50 or more that is yet to appear on a statement.
  • Citi FlexiBill: Convert purchases of $500 or more included in the closing balance from your last statement.
  • Citi Quick Cash: Convert a withdrawal of $500 or more.
  • Repayment Terms: Repayments feature a fixed rate, with terms ranging between 1 and 5 years.
  • Credit Limit: Each instalment plan uses part of your existing credit limit, freeing up space as you pay off the plan.
  • Missed Payments: If you miss an instalment payment, the card’s applicable rate will be applied to the missed amount, or Citi may cancel the plan, reverting the balance to the card’s applicable rate.
  • Additional Payments: You can make extra payments on your plan, with advance notice required unless the instalment plan is the only balance owing.
  • Plan Changes: You can change the term or pay off your plan at any time without fees

 

Coles

As a Coles credit cardholder, you can utilise a Coles Instalment Plan, which has the flexibility of 3 different instalment options:

  • Statement Instalment: Convert $500 or more from the closing balance of your last statement.
  • Transaction Instalment: Convert purchases of $50 or more that are yet to appear on your statement.
  • Cash Instalment: Convert cash withdrawals of $500 or more.
  • Setup: You can set up an instalment by calling Coles on 1300 066 985.
  • Credit Limit: Instalment plans use part of your existing credit limit. Every time you make a repayment, the amount paid becomes available again for future card spending.
  • Interest-Free Days: You may still be eligible for interest-free days on new card purchases if you pay the closing balance on your statement by the due date each month.
  • Early Repayment: You can pay off your Coles Instalment Plan at any time, without early repayment fees.

 

CommBank

CommBank’s instalment plan SurePay is available to all Commonwealth Bank credit cardholders. Here’s how it works.

  • Card Purchase Instalment Plan: Convert a one-off purchase of $100 or more, made in the last 14 days.
  • Card Balance Instalment Plan: Convert all or part of your card balance of $600 or more (excluding cash advances, balance transfers, and existing instalment plan balances).
  • Cash Advance Balance Instalment Plan: Convert all or part of your cash advance balance of $600 or more.
  • Setup: Create an instalment plan in NetBank or the CommBank app by choosing the term and fixed monthly repayment.
  • Costs: Costs vary between plans and cards, with the fixed interest rate and any other costs outlined by CommBank when setting up the plan.
  • Multiple Plans: You can have up to 50 plans at once on each CommBank credit card in your name.
  • Interest-Free Days: You may still be eligible for interest-free days on new card purchases if you pay your closing balance by the due date.
  • Missed Payments: If you miss an instalment payment, the unpaid amount will be placed back on your account, where the card’s applicable rate will be applied. If you fail to make required monthly instalments for 3 consecutive months, the plan may be cancelled, and the remaining balance will revert to the card’s applicable rate.
  • Plan Changes: You can cancel or pay off your plan at any time.

humm

Aside from offering 110 days interest-free on eligible card purchases, the humm90 Mastercard (previously Skye Mastercard) provides cardholders the following humm90WRAP instalment plan options.

  • Interest-Free Period: Up to 110 days on eligible card purchases.
  • humm90WRAP Instalment Plans: Convert card purchases of $250 or more to a humm90WRAP instalment plan, repaid over 9, 12, or 15 equal monthly instalments.
  • No Interest Charged: No interest is charged on instalment plans, but a fee is applied, calculated as a percentage of the total amount payable on the card purchase selected.
  • Eligible Purchases: Only eligible purchases made within the previous 30 days may be converted to a humm90WRAP instalment plan.
  • Ineligible Transactions: Cash advances, balance transfers, interest, fees, charges, and commissions are not eligible.
  • Missed Payments: If you fail to pay a fixed monthly instalment, interest will be charged on the unpaid amount at the card’s standard rate (currently 26.30% p.a.).
  • Exclusive Offers: Exclusive instalment plan offers are available at selected retail partners.

 

ING

As an ING credit cardholder with an ING Orange One Low Rate Card or ING Orange One Rewards Platinum Card, you have the option of setting up instalment plans on your purchases, as follows.

  • Eligibility: You can create an instalment plan on eligible amounts of $250 or more.
  • Repayment Terms: Terms range from 3 months to 7 years.
  • Interest Rate: ING advertises its instalment plan rate at 9.99% p.a. variable.
  • Setup: You can set up an instalment plan by logging in to online banking or the bank’s app, and selecting the amount you want to convert to a plan.
  • Credit Limit: All plans are included within your existing credit limit.
  • Multiple Plans: You can have up to t10 instalment plans on each card account in your name, each with different terms, interest rates, and repayment amounts.
  • Plan Changes: You can change the term of your existing plans at any time, up to 3 times over the first 2 years.
  • Extra Payments: You can make extra repayments to your plan without paying an early repayment fee.

 

Latitude Financial Services

Within its card range, Latitude offers the Gem Visa and GO Mastercard. Both of these cards provide instalment plan options.

  • Gem Visa:
    • Up to 55 days interest-free on purchases up to $250.
    • 6 months interest-free on purchases of $250 or more.
    • Long-term interest-free plans at thousands of participating retailers.
  • GO Mastercard:
    • Up to 55 days interest-free on everyday purchases.
    • 3 types of instalment plans:
      • Equal monthly repayments.
      • Minimum monthly payment with no set repayments.
      • No set repayments or minimum monthly payment requirements.
    • Plans vary and are only available during select promotional periods

Qantas Money

As far as we were able to tell, Qantas Money is currently offering its instalment plan only to its Qantas Premier Card holders. Here’s how it stacks up.

  • Statement Instalment Plan: Convert your card purchases to a Statement Instalment Plan, locking in a lower rate than your card’s standard purchase rate over a set term.
  • Setup: Choose the amount you want to convert to a plan and work out the repayment term based on the plan’s monthly repayments.
  • No Setup Fees: There are no setup fees.
  • Additional Repayments: You can make additional repayments or pay off the instalment plan at any time, without extra charges.
  • Term Changes: You can change the term of the plan, but this will change your payment amount.
  • Multiple Plans: You can have more than 1 plan on your card, as long as the plans fall within your available credit limit.
  • Qantas Points: Earn up to 150,000 Qantas Points when you spend $5,000 or more on eligible purchases within 3 months of approval. This offer changes frequently, so check the official Qantas Money Instalment Page for details.
  • Interest-Free Days: You can keep your interest-free days on new purchases if you pay your closing balance by the due date.

 

St.George

Available to all St.George credit cardholders, the bank’s Plan&Pay instalment plan feature works as follows.

  • Option 1: Convert a single card purchase of $200 or more made in the previous 30 days, with 0% p.a. interest over 3, 6, or 12 months. An upfront fee applies (1% for 3 months, 2% for 6 months, or 4% for 12 months).
  • Option 2: Convert all or part of your credit card balance, paying it back in set instalments over 3-36 months. There is no upfront fee, but interest is charged at a rate lower than your card’s current rate.
  • Credit Limit: You can have up to 8 active Plan&Pay plans at once.
  • Extra Repayments: You can make extra repayments without penalty.
  • Plan Changes: You can cancel or pay off your plan at any time without extra fees. The standard variable rate of interest will apply to any remaining balance.
  • Availability: This feature is also available on BankSA and Bank of Melbourne credit cards.

 

Virgin Money

Virgin Money credit cards operate in much the same way as Coles Instalment Plans, because they're both backed by NAB.

  • Card Purchase Instalment Plan: Convert cash advances, transactions, and balances to instalment plans.
  • Fixed Interest Rate: Benefit from a fixed interest rate lower than your card’s standard rate, making budgeting easier.
  • Setup: Create a Fixed Payment Option by signing in to Virgin Money Online and going to My Offers in Rewards & Offers.
  • Multiple Plans: You can have more than 1 Fixed Payment Option as long as the total amount of all plans is within your credit limit.
  • Interest-Free Days: Benefit from interest-free days on purchases if you pay your closing balance by the statement due date.
  • No Additional Velocity Points: You won’t earn additional Velocity Points on your instalment plan.
  • Extra Repayments: You can make additional repayments by contacting the Customer Care Team on 13 37 39.
  • Plan Changes: You can change the length of your plan term or cancel at any time without early repayment fees.

 

Westpac

As a Westpac credit cardholder, you can take advantage of 2 instalment options offered via Westpac’s SmartPlan.

  • Large Purchase SmartPlan: Convert any purchase of $500 or more made in the previous 30 days to an instalment plan over 3, 6, or 12 months with zero interest. An establishment fee applies (1% for 3 months, 2% for 6 months, 4% for 12 months).
  • Credit Card Balance SmartPlan: Convert any purchase, cash advance, or balance transfer balance of more than $200. This will attract interest at the SmartPlan Annual Percentage Rate, which Westpac will confirm when you set up the plan.
  • Setup: Log in to online banking and select either the purchase or balance you want to convert. The plan will be activated within 2 business days.
  • Multiple Plans: You can have up to 8 SmartPlans at any one time.
  • Extra Payments: You can make extra payments on your plans, but those payments will be applied to your card’s outstanding balance first.
  • Plan Cancellation: You can cancel your SmartPlan at any time via online banking.

 

Pros and Cons of Credit Card Instalment Plans

While instalment plans on credit cards vary widely, there are some general pros and cons worth considering if you’re thinking about utilising one.

✅ If you’re organised, you can manage a number of instalment plans at once to take advantage of lower rates.

✅ If you need motivation to pay down your debt, you may find having a set repayment schedule beneficial.

✅ With a set repayment schedule in place, you may also find it easier to budget month-to-month.

✅ Most providers build in plenty of flexibility, allowing cardholders to choose a term that suits their budget when creating a plan, to then change terms, make extra repayments and cancel their plans without facing fees.

✅ As long as you pay your instalment payments and your card’s closing balance, you should continue to benefit from interest free days on new purchases, even though you are technically carrying a balance.

❌ Depending on your card, your plan term and its charges, you may end up paying more to convert your transactions to a plan than you would simply paying it off month by month.

❌ Like buy now pay later services, you may feel tempted to spend more knowing you can spread the cost over a longer period.

❌ Unless you manage your plans and your spending carefully, you may find it hard to cover your repayments each month.

❌ Each plan uses up your available credit limit. If you have too many plans at once, you may not be able to use your card day-to-day as needed.

❌ You need to be aware of how your payments are allocated when you have a plan in place. You may find that your provider allocates your payments in such a way that you end up paying more in interest elsewhere, as higher interest transactions remain unpaid.

Pauline Hatch

Pauline Hatch is a personal finance expert at Creditcard.com.au with 9 years of finance writing under her belt. She loves turning complex money concepts into simple, practical actions so you can win financially. You can ask Pauline any questions by submitting a comment below and get a personal reply.

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bruce

bruce

14 June 2024
credit card debt due $4098 on 18 june..can pay $1100 on 18 june leaving $2998.then on 27 june can pay further $1700 leaving $1298.purchase rate 10.990% p.a better options available credit card is used for dally expenses
    Pauline - CreditCard.com.au

    Pauline

    19 June 2024
    Hi Bruce, if you need time to make your repayment you can contact your bank to discuss your options. Banks can be very good at creating payment plans to help you out. A 10.9% purchase rate is already very good, but you can look at low interest rate cards to compare. Your other option is to look at a balance transfer credit card to give you more time to pay off your balance without interest.
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