Credit Card Instalment Plans

Updated 28 July 2021

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 are worth using, so you can decide whether this is an option that would work for you. But, are they worthwhile?

Which Credit Cards Offer Instalment Plans?

According to Citi Australia’s June Credit Card Index, credit card instalment plans are becoming increasingly popular, with the provider’s most recent figures indicating a 12% growth in instalment plan use in the past year. As it stands, 13% of Citi cardholders use, or have tried, their provider’s Fixed Payment options. Citi is just one of the growing number of credit card providers now offering cardholders the opportunity to pay down their balance in instalments. Designed to rival buy now pay later services such as Afterpay, these instalment plans essentially allow cardholders to spread the cost of their purchases, so they can pay them off in manageable chunks, while paying less in interest.
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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.

Aside from making debt less daunting, creating an instalment plan can help cardholders in a number of other ways too.

  • Save on interest: When you carry a balance on your card, you pay interest at the card’s standard rate. This makes it harder to pay off your debt, with interest continuing to grow the longer you let it lie there. With an instalment plan, you should pay interest at a lower rate, according to your provider’s terms. Bear in mind, fees may also apply.
  • Increase motivation: Instead of having a chunk of debt that you carry over month-to-month, you can create a plan with set repayments. This could give you the motivation you need to pay down what you owe, instead of pushing it into the Too Hard basket.
  • Flexibility: While some instalment plans are more flexible than others, you may have the option to have a number of plans on the go at once, changing the length of your plan or cancelling it, should you need to. Some plans also allow you to make extra payments to pay off your debt faster.

Example
Let’s look at how using an instalment plan might work, using CommBank’s SurePay as an example.
CommBank offers three different types of instalment plan, allowing cardholders to pay off a single card purchase, their entire balance, or a cash advance in set instalments.

  • Isla uses her card to cover a $500 electricity bill. She knows she won’t be able to pay off her other card purchases plus that bill at the end of the month, so she decides to set up an instalment plan on the bill, so she can clear her other purchases more easily. She chooses a three month instalment plan, paying off her $500 bill in three repayments, with interest applied at a rate set by CommBank.
  • Ash has a few other financial commitments this month, so he decides to create an instalment plan to pay off his credit card balance of $1,500. This allows him to pay down his balance over four months, paying less in interest 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. While he is still paying interest on this withdrawal, it is at a lower rate than his card’s standard cash advance rate, making his debt easier to manage as he pays it off.

 

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

American Express offers its instalment plan Plan It feature to all American Express cardholders, except those who carry Corporate, Small Business and Charge cards, and David Jones branded credit and store cards (more on those later). Here’s how Plan It works.

  • Plan It allows you to section off a portion of your most recent statement, to pay it off in fixed monthly instalments with 0% p.a. interest.
  • To set up a plan, simply log on to your account online, choose the amount you want to section off (minimum $150), and select the period of time you will need to pay it back (3, 6, 9 or 12 months).
  • You will pay no interest on your instalments, but you will pay a fixed monthly fee. This fee is determined by the type of card you hold and your plan amount.
  • There is no fixed maximum amount you can plan, but the plan must consist of new purchases from your most recent statement.
  • You can have multiple plans at once, but the amount you can plan overall will depend on your credit limit. Any amount held within your plans will reduce your available credit limit for day-to-day card spending.
  • Certain types of transactions are not eligible for Plan It, including balance transfers, cash advances, fees, interest, and balances on a promotional rate.
  • As long as you clear your remaining balance outside of your plans by the statement due date, you may take advantage of interest free days on new card purchases, as per your card’s terms.
  • With Plan It, you cannot make changes to a plan once it’s been created. You can, however, cancel a plan at any time with no cancellation fee. The amount remaining will go back onto your card balance.
  • You can’t make extra payments towards your plan balance. Any extra payments you make will be applied to your standard balance.

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.

  • Paying back $2,000 over three months, he would pay $666.67 each month, plus a $20.80 monthly fee. Overall, his fees would come to $62.40.
  • Paying back $2,000 over six months, he would pay $333.34 each month, plus a $20.80 monthly fee. Overall, his fees would come to $124.80.
  • Paying back $2,000 over nine months, he would pay $222.23 each month, plus a $20.80 monthly fee. Overall, his fees would come to $187.20.
  • Paying back $2,000 over 12 months, he would pay $166.67 each month, plus a $20.80 monthly fee. Overall, his fees would come to $249.60.

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 20% p.a. and there are no other purchases owing.

  • Paying back $2,000 over three months, Lee would pay $680 each month, with a total interest cost of $33. This comes to $29.40 less than when using Plan It.
  • Paying back $2,000 over six months, Lee would pay $350 each month, with a total interest cost of $83. This comes to $41.80 less than when using Plan It.
  • Paying back $2,000 over nine months, Lee would pay $238 each month, with a total interest cost of $134. This comes to $53.20 less than when using Plan It.
  • Paying back $2,000 over 12 months, Lee would pay $190 each month, with a total interest cost of $177. This comes to $72.60 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 20% p.a. purchase rate.

  • Paying back $8,000 over three months, she would pay $2666.67 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 $2,750 per month over three months, including $130 in interest overall. In this example, using Plan It would cost $119.60 more.
  • Paying back $8,000 over six months, she 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 $1,415 per month over six months, including $326 in interest overall. In this example, using Plan It would cost $173.20 more.
  • Paying back $8,000 over nine months, she 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 $950 per month over nine months, including $538 in interest overall. In this example, using Plan It would cost $210.80 more.
  • Paying back $8,000 over 12 months, she 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 $750 per month over 12 months, including $721 in interest overall. In this example, using Plan It would cost $277.40 more.

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.

  • You can set up an Easy Instalment plan on any eligible card purchase of $100 to $10,000.
  • To create a plan, go to Offers in the app, select the relevant purchase and confirm the details to submit your request.
  • Bankwest will assess your request, and if approved, will provide you with details of the plan within two business days. This will include your repayment schedule, and any interest or fees that will apply.
  • You can have up to five plans at once. Any amount held within a plan makes up part of your overall credit limit.
  • You can continue to benefit from interest free days on new card purchases as long as you pay your monthly instalment amount and your full closing balance outwith those instalments by the statement due date.
  • Cash advances, gambling transactions, balance transfers, purchases on a promotional offer and purchases made more than 30 days prior aren’t eligible.
  • You can make extra payments towards your plan, but if you have a balance outwith your plan, the payment will go to paying that down first.
  • There is no obligation to make your monthly instalment payment, but any payments you fail to make by the end of the plan term will revert to your standard purchase rate. You must make at least the minimum repayment on your card each month to avoid late fees.

 

BOQ

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

  • With a BOQ Instalment Plan, you can spread the cost of your entire credit card balance, just one purchase, or a cash advance. Plans feature a personalised fixed rate, and are created over a set term ranging between one and five years.
  • The minimum amount you can convert to a plan on a Statement Instalment or Cash Instalment is $500, while the minimum amount on a Transaction Instalment is $50.
  • You can have multiple plans at once, as long as the total doesn’t exceed your overall credit limit.
  • 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 (as per your card’s terms).
  • Aside from the fixed interest rate applied to each plan, you may also pay an Instalment Plan fee. Details of fees and interest will be specified in the offer BOQ sends you.
  • If you fail to pay the monthly instalment by the due date, interest on that instalment amount will be applied at the card’s purchase rate. Alternatively, BOQ may choose to cancel the plan, and the entire plan balance will revert to the card’s applicable rate for that transaction.
  • You can change the term of your plan if you want, but it will change your instalment amount. You can also pay off your plan at any time with no fees.

 

Citi

“Like buy now, pay later, but for anything,” Citi offers three instalment plans – or Fixed Payment Options – to its credit cardholders.

  • With Citi PayLite, you can convert a purchase of $50 or more that is yet to appear on a statement.
  • With Citi FlexiBill, you can convert purchases of $500 or more included in the closing balance from your last statement.
  • With Citi Quick Cash, you can convert a withdrawal of $500 or more.
    Repayments feature a fixed rate, with terms on each plan ranging between one and five years. Citi may also apply a fee.
  • To find out if a Fixed Payment Option is available, simply log in to your Citi account and check the Offers section.
  • Each Fixed Payment Option uses part of your existing credit limit. So, as you pay off your plan, that amount frees up space within your available limit for further card spending.
  • If you miss an instalment payment, the card’s applicable rate will be applied to the missed instalment amount. Or, Citi may cancel the plan, and the entire amount will revert to the card’s applicable rate.
  • You can make additional payments on your plan, as long as you provide Citi advance notice. If your instalment plan is the only balance owing, you don’t need to provide notice.
  • 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. As Coles credit cards are issued by Citigroup, Coles Instalment Plans work in much the same way as Citi’s Fixed Payment Options.

  • You can use a Statement Instalment to convert $500 or more from the closing balance of your last statement.
  • You can use a Transaction Instalment to convert purchases of $50 or more that are yet to appear on your statement.
  • You can use a Cash Instalment to covert cash withdrawals of $500 or more.
  • You can set up an instalment by calling Coles on 1300 066 985.
  • Instalment plans use part of your existing credit limit. So, every time you make a repayment, the amount paid becomes available again for future card spending.
  • 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.
  • 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.

  • With a Card Purchase instalment plan, you can convert a one-off purchase of $100 or more, made in the last 14 days.
  • With a Card Balance instalment plan, you can convert all or part of your card balance of $600 or more. This excludes cash advances, balance transfers and existing instalment plan balances.
  • With a Cash Advance Balance instalment plan, you can convert all or part of your cash advance balance of $600 or more.
  • You can create an instalment plan in NetBank or the CommBank app. Simply choose the term and fixed monthly repayment that suits you, for each plan you want to create.
  • Costs vary between plans and cards. The fixed interest rate and any other costs will be outlined by CommBank when you set up the plan.
  • You can have up to 10 plans at once on each CommBank credit card in your name.
  • You may still be eligible for interest free days on new card purchases if you pay your closing balance by the due date.
  • If you miss an instalment payment, your plan won’t be cancelled, but the unpaid amount will be placed back on your account, where the card’s applicable rate will be applied.
  • You can cancel or pay off your plan at any time. If there is an amount remaining, this will be added to your purchase balance or cash advance balance (depending on the SurePay plan you set up).

 

David Jones

While these cards are issued by American Express, the David Jones American Express Card and David Jones American Express Platinum Card offer a different instalment plan to Amex’s Plan It. This is how it works.

  • With the 3 Months Pay Later plan, you will have no interest and nothing to pay for three months when you use your card and spend $50 or more in one transaction, instore or online at David Jones. If you have not repaid the purchase within three months, it will be added to your standard balance the following statement period.
  • With the 12 Months Interest Free plan, purchases of $500 or more made online or instore at David Jones using your card will attract no interest, as you pay back the cost in 12 equal monthly instalments. There is a $35 establishment fee and a $2.95 monthly fee for each new plan.
  • With the 5 Years Interest Free plan, purchases of $1,000 or more made online or instore at David Jones using your card will attract no interest, as you pay back the cost in 60 equal monthly instalments. There is a $35 establishment fee and a $2.95 monthly fee for each new plan.

 

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.

  • You can convert card purchases of $250 or more to a humm90WRAP instalment plan, repaid over 9, 12 or 15 equal monthly instalments.
  • While there is no interest charged on instalment plans, a fee will be applied, calculated as a percentage of the total amount payable on the card purchase selected.
  • Only eligible purchases made within the previous 30 days may be converted to a humm90WRAP instalment plan. Ineligible transactions also include cash advances, balance transfers, interest, fees, charges and commissions.
  • If you fail to pay a fixed monthly instalment, interest will be charged on the unpaid amount at the card’s standard rate (currently 23.99% p.a.).
  • Exclusive instalment plan offers are also 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.

  • You can create an instalment plan on eligible amounts of $250 or more. Repayment amounts are fixed, with terms ranging from three months to seven years.
  • ING advertises its instalment plan rate at 9.99% p.a. variable.
  • To set up an instalment plan, log in to online banking or the bank’s app, and select the amount you want to convert to a plan. ING will tell you the maximum amount available. All plans are included within your existing credit limit.
  • You can have up to ten instalment plans on each card account in your name, and each plan may have a different term, interest rate and repayment amount.
  • You have the option to increase or decrease the term of your existing plans at any time, but bear in mind this will change the monthly instalment amount. You can change the term of a plan up to three times over the first two years.
  • 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.

With the Gem Visa:

  • You can benefit from long term interest free plans at thousands of participating retailers.
  • On purchases up to $250, you can take advantage of up to 55 days interest free.
  • On purchases of $250 and more, you can benefit from six months interest free.

With the GO Mastercard:

  • You can benefit from long term interest free plans at thousands of participating retailers.
    There is a choice of three types of plan, each with different repayment options:

    • One with equal monthly repayments that are the same every month,
    • One with only a minimum monthly payment and no set repayments,
    • One with 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.

  • You can 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. Simply choose the amount you want to convert to a plan, then work out how long you’ll need to repay it based on the plan’s monthly repayments.
  • While you will pay interest, there are no setup fees. You can make additional repayments, or pay off the instalment plan at any time, at no extra charge. You also have the option to change the term of the plan, although this will change your payment amount.
  • You can have more than one plan on your card, as long as the plans you have fall within your available credit limit.
  • Currently, you can earn up to 6,000 Qantas Points when you set up a Statement Instalment Plan of $1,000 or more and make your first three consecutive repayments on time.
  • As long as you pay off your closing balance by the due date, you can keep your interest free days on new purchases as per your card’s terms.

 

St.George

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

  • Option 1: You can convert a single card purchase of $200 or more made in the previous 30 days, while paying 0% p.a. interest over a period of 3, 6 or 12 months. You will pay an upfront fee based on a percentage of the purchase amount of your chosen plan (1% for 3 months, 2% for 6 months or 4% for 12 months).
  • Option 2: You can convert all or part of your credit card balance, paying it back in set instalments over 3-36 months. There is no upfront fee with this option, but you will pay interest at a rate lower than your card’s current rate. This option can also be used to pay off cash advances and balance transfers with more than three months remaining.
  • You can have up to eight active Plan&Pay plans at once.
  • You can make extra repayments without penalty.
  • You can pay off your Plan&Pay plan or cancel at any time without any extra fees. The standard variable rate of interest will apply to any remaining balance.

Note, this Plan&Pay feature is also available on BankSA and Bank of Melbourne credit cards.

Virgin Money

Like Coles credit cards, Virgin Money credit cards are also issued by Citigroup. As such, the Fixed Payment Option instalment plans offered on Virgin Money credit cards will seem familiar.

  • Cardholders can convert cash advances using the Cash Instalment Plan, transactions using the Transaction Instalment Plan, and their balance using the Statement Instalment Plan.
  • To create a Fixed Payment Option, sign in to Virgin Money Online and go to My Offers in Rewards & Offers.
  • With each plan, you will benefit from a fixed interest rate less than your card’s standard rate. This will give you fixed monthly repayments, making it easier to budget.
  • You can have more than one Fixed Payment Option as long as the total amount of all plans is within your credit limit.
  • You can benefit from interest free days on your purchases as long as you pay your closing balance by the statement due date.
  • You won’t earn additional Velocity Points on your instalment plan.
  • You can make additional repayments by contacting the Customer Care Team on 13 37 39.
  • You can change the length of your plan term, and you can cancel at any time without early repayment fees, either by paying out the plan early or by cancelling the plan.

 

Westpac

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

  • With a Large Purchase SmartPlan, you can 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. You will pay an establishment fee based on your plan’s term paid as a percentage of your plan amount (1% for 3 months, 2% for six months, 4% for 12 months).
  • With a Credit Card Balance SmartPlan, you can 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.
  • To set up a SmartPlan, log in to online banking and select either the purchase or balance you want to convert. The plan will then be activated within two business days.
  • You can have up to eight SmartPlans at any one time.
  • You can make extra payments on your plans, but those payments will be applied to your card’s outstanding balance first.
  • 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.

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