When given a choice between full payment or pay by instalment without interest, which would be a better option? What are some considerations to take note of?

Hi anon,

Most pay by installment plans do have a processing fee, so it is not exactly interest free in a way, there is an effective interest rate associated with going down this route.

However the bank may have a promotion where there are no processing fees, so you do need to check with your bank. This is probably the most important point. If there are really no fees, and you can pay off the monthly amount in full every month, then you can consider paying by installments.

Personally I prefer to pay off in full so that I do not lure myself into a false sense of security that I don't owe a lot; any sudden and unexpected expense would greatly impact and inconvenience me.

I would prefer instalments if it's a bigger purchase, if I am buying in bulk, or if I have certain big purchases to make for that particular month and need to fit that into my monthly budget. Because then it helps me categorise these purchases accordingly. You can choose to use instalments under certain cards, but personally I prefer Buy Now Pay Later providers that offer 0% interest and that allow you to track your spending habits. I used Klarna when I lived in EU and now I use hoolah in SG. It is dependent on the brands they partner with as well and if you are a frequent purchaser of those brands/ categories.

So far I've had a good experience with hoolah and Klarna, you might want to try them out!