SG Budget Babe
Asked on 06 Dec 2019
I have enough in savings to pay a rather large amount, but was wondering if putting the payment on a 0% installment plan on my credit card would be better. Considerations include leaving the money in my savings account to gain interest over the year, do installment payments earn cashback/miles etc. Could anyone weigh in on the pros and cons please?
Pay it off all at one shot. The interest you are paying is not worth it at all. You might lapse and forget about it. If GIRO is setup, that's okay. But just got to make sure your account has sufficient amount before the GIRO takes place.
Nay. Paying off your debt immediately is recommended.
It happens to me when i do installment. Sometimes i forget to pay and incur interest fees. If do not have cashflow issue, paying l oneshot is the best way to do it.
Yay for me! 0% installment, its like free loan.
With the extra cash flow, I am sure I can earn more elsewhere =) Even simple ways like leaving cash in higher interest saving account is a plus. (I usually use it for stock options though)
(This is from a guy who does credit card balance transfer 6 months for the low interests and using it somewhere to earn more than the low interests, so take my advice with a pinch of salt and some pepper)
summary: if u willing to plan and able to save, instalment is GREAT!
Top Contributor (Dec)
No. Paying in installments tends to create a false sense of security that your debt is still manageable.
I'd prefer to just pay off everything and be free of guilt or worry.
Unless you have cashflow issues, I prefer to just pay upfront and not have to worry about not being in the clear.
No. No. No. A thousand times no.
It ties you to the issuing bank, making it harder for you to terminate the card even when you no longer need it.
Once you're on an installment payment plan, it becomes extremely costly if you miss a single payment - for example, if you ever forget to pay your credit card bill on time even just once.
And finally, anecdotal evidence suggests that banks are less likely to waive annual fees if you're on IPP.
Standard Chartered credit cards still offer rewards on installment plans.
Snippets from their website:
"Take charge of your finances with our 0% interest instalment plan which offers you a choice of tenures up to 36 months with no additional charges for signing up. You will continue to earn 360° Rewards Points or Cashbacks for all purchases made on the instalment plan."
Check them out here: https://www.sc.com/sg/bank-with-us/manage-your-finances/zero-instalment/
Hey Adriel, I personally think it's better to pay off all debts at once. This avoids the risk of you incurring hefty late fees as a result of missing any payments. The extra interest earned from savings may not cover the hassle of you tracking all installment plans you have incurred. You would also have a better idea of your savings on hand instead of having so many moving parts around your account.
Only if you truly understand and certain of your future cashflow over the repayment period, would not lead to excess interest being accrued due to unexpected cash needs
Nay. You will end up paying more than the original price supposed to
Yes! is interest-free so its like an interest free loan for you to do productive things
(of course its a nay if u take the interest free loan to go buy more luxury goods)
so u can take the instalment and go invest in stocks or bonds!
Most cards don't give miles/cashback for instalments. CIMB does, but the card is absymal.
If you put the money to gain interest, you can't touch it. Are you self-disciplined enough?
The marginal interest earned + poor rate from CIMB < miles/cashback from optimal cards.
I personally will say Nay.
Unless you will have major cashflow issues.
I personally will say Nay. eity thing as well, I will rather pay it off immediately than having potential worries - late fees, changes of policies, not forgetting these little amounts will eat into your monthly credit limits. All these are just plain troublesome.
If you can pay, pay it off. It may be 0% installment, but there's still a one time processing fee, plus the remaining amount reduces your credit limit - aka if you have 1k on installment and your original limit is 5k, you credit remaining is 4k. Do it over long term and it'll spiral.
If you forget to pay, that's bad too as the interest charged is atrocious.
If there are still rewards and you are able to pay on schedule then I don't see why not. But personally I would prefer to pay it in one shot in case I forget to pay.
I used to pay by credit card instalments even though I had the cash to pay a one-time credit card charge bill upfront. Even if you leave the money in your savings account to earn interest of about 1.5% pa, you would have made that as a cash saving when you charge the same amount to a cashback credit card that gives 1.5% cashback. Might as well pay using a one-time credit card charge.
Credit card installments are meant to help you in big purchases not for u to spend & spend... i have personally seen ppl get into credit card debt coz of things like cash advance cards/ cashline or 0% fee... if its items less than $500, i think it would be great for you to pay off such things first.... of coz if u plan to purchase things like branded stuff and then get them on installments juz so that u can "afford" it then its the wrong way of thinking. u muz always ask yourself "why do you want to do this in installments?" is it coz u have other financial debts to settle as well? if need be and u can afford it then try to pay off in like 3 mths or so rather then choose to divide it more than 12 mths. Like some of my insurance premiums i choose to pay annually (to save 3%) by my dbs cards then divide it by installments rather than paying monthly. always learn to stretch your dollar wisely...