Installment payment plans, offering a “buy now, pay later” model, have become popular in recent years, especially in the face of rising inflation. These programs provide consumers with the flexibility to split large purchases into more manageable regular payments, and can be especially helpful for consumers with low credit limits.
How does it work?
Most installment programs allow customers to split their qualifying purchases into equal payments over a given period of time, often with fixed fees or at low (or zero) interest rates, allowing shoppers to make smaller payments on a schedule that works for their needs, budget, and spending habits. For example, HUECU’s Installment Payments Program gives cardholders the option to split their qualifying purchases into equal monthly payments right in their cards app. Plan durations and terms will vary based on factors such as the total purchase amount and creditworthiness. HUECU cardholders looking to make use of the Installment Payments Program will be offered three separate repayment options for qualifying purchases above $100.
Is there a catch?
Installment plans can be helpful for paying off big-ticket items through more reasonable, regular payments, particularly if someone has a low credit limit, is budgeting for other large expenses around the same time, or has other important expenses. There are, of course, a few things to take note of, and consumers should never use installment programs to make purchases they won’t be able to afford to pay off. When enrolling in an installment program, consumers should be careful to take note of the interest, if any, that is being charged as well as other potential fees such as late penalties. Shoppers should also take note of whether the plan that they choose requires any sort of credit check, which could affect their credit score.
Tips for making the most of your installment plan:
- Try not to take out too many installment plans at once. You do not want to lose track of the payments you need to make or overextend the funds you have available. HUECU allows for a maximum of 10 plans at any given time.
- Make payments on time! Be sure not to miss a payment as you could incur a late fee, become ineligible for future installment plans, or risk hurting your credit score. Plus, if you make each installment payment on time, you can likely avoid paying any interest that may be associated with your plan!
- Familiarize yourself with the terms and conditions of your plan. Make sure you know any fees or interest associated with your plan, as well as payment dates and any potential penalties such as for closing a plan early.
- Know your end goal. Before enrolling in an installment plan, be sure to calculate any associated interest and fees so that you know the total amount you will end up spending and if it is within your budget.
- Don’t forget about rewards! Many plans will still offer rewards and points if you pay using a credit card. HUECU cardholders, for example, will retain any rewards associated with their purchase even if they convert that purchase into an Installment Payment Plan.
Like with any financial decision, it’s important to think carefully before taking out a payment plan to make sure that it’s the right decision for you, your budget, and your spending schedule. If you do decide to make use of an installment plan, it can be a great way to alleviate the financial burden and stress of making a large purchase!
