In this age dominated by purchase schemes based on the principle of “Buy Now, Pay Later”, it has become convenient to procure day to day and luxury goods, articles and gadgets of substantially higher value and pay back in installments. The term Equated Monthly Installment or EMI as popularly known has given a new meaning to the way we shop. Since it's nearly impossible to buy all that we want by paying cash upfront owing to budgetary constraints, EMI schemes help to a great extent.
Most of these offers and schemes are available on basis of payment of the principal amount along with applicable interest charges at a fixed rate. A prominent product that offers 0% installment plan in the Philippines is Credit card. Nearly all banks and finance institutions offer interest benefits for card members who are are willing to make a large value purchase and convert the transaction into an EMI based payment arrangement. It's paramount to read the fine print(terms & conditions) before making a choice to buy and pay in installments.
Credit card providers administer a slew of 0% installment plans to help customers save on the interest charges which they would have incurred if payment is made along with other standard purchases. While these options are lucrative, there are some things you must bear in mind before option to pay on installment basis as elaborated in the section below.
Things You Should Consider Before Opting for 0% Installment Plan
Validate if the Plan is Genuine
Scout for hidden costs and charges. You may not be paying interest charges for payment on installment basis but may incur costs in terms of processing administration fees billed in the background. Most the the fees billed is a considerable percentage of the purchase value. For example, they may bill you 2% processing fee of the transaction value. For small value purchases, this may be negligible. On the flipside, high value purchases is something you must consider before opting for this plan. It defeats the purpose of not paying any charges for agreeing to pay back in installments.
Confirm the Terms & Conditions
Some of the installment plans offered at no interest charges is only valid for a certain term option. For example, let's say you’re buying a washing machine from an electronics store using your card and convert this purchase into an EMI. The bank may only offer this plan(0 percent) for a term of 3 months. Anything above this may attract interest charges or a fee. Make sure to check all related documents and also ask for a fine print to confirm the applicable terms and conditions.
Impact on Your Monthly Budget
At the behest, it may sound luring to procure your favorite furniture or an appliance of substantially high value on an installment plan. Do not forget to weigh this against your income and monthly budget. Since installment plans last for at least a couple of months, you do not want to feel burdened during this time. Remember, the installment payment is in addition to the outstanding balance on your credit card which simply implies the value is added every month to the min. payment due, which inflates the required payment each billing month.
Early Settlement Penalty
Some of the banks that offer the 0% installment plan will charge a penalty if you decide to settle the outstanding balance in the EMI account before the actual end date. This fee is generally a percentage of the outstanding balance and can hit you hard if the purchase value was high. Some of them also charge the penalty amount as a fixed value. If the EMI payment is not received on time, a late payment fee may also be levied, creating costs to the other “zero’’ installment plan.
Types of 0% installment Plans
Based on the credit card provider and running offers, there are two types of installment plans widely seen in today. Details have been provided below.
Installment Plans Offered In Partnership With Merchant Establishments
Nearly all banks tie up with merchants not only in the Philippines but also locations around the globe to offer installment plans either on general products available in the store or specific articles. As a privileged cardholder, you may also be eligible for discounts along with EMI offers on specific articles. The installment plans are also available with leading online shopping portals.
Since the bank would have already tied with the merchant for provision of Installment options, one has to simply express their intention of buying on EMI basis and present the card for transacting. The purchase is instantly converted since the systems are linked electronically, thereby saving you from the hassles of manually contacting the bank for conversion. Details pertaining to the tie ups are available on the official website of the bank or with leading stores and brands in the Philippines.
Transactions That Can Be Converted into Installment Post Purchase
Most of the banks also let you convert purchases outside the merchant network into 0% installment plans. This works exactly the same as the above, except the fact that you have to manually call the customer service department or visit the nearest branch for conversion. Do check for terms and conditions before deciding to convert.
Leading Banks in the Philippines Offering 0% Installment Plans
- Eastwest Bank
In addition to the above, some branded credit cards go an extra mile by offering installment payment option for other charges such as payment of tuition fees. Do inquire with the customer service wing if you have such requirement. These details are also available in the paperwork that you receive in the welcome kit along with the card by mail.
If you’re looking for a card that offers the 0% installment option, use the “Credit Cards” section on the homepage of this site to self navigate and check offers from various banks in the Philippines. Comparing cards before applying helps immensely in ensuring you have the right card that syncs with your requirements.
Also Read: More Credit Cards with No Annual Fee