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!
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.
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
I frown upon credit card installments. It is simply no worth paying interests for delaying part of your debts. It is better to pay off all your debts in one payment. Set up Giro to take care of credit card debts. The interest you earn from the savings account is not even sufficient to pay the interest for credit card installments.
Hi Adriel, i would only recommend doing so you are able to pay it consistently on time and also able to manage your cashflow well. Otherwise, it might be better to pay off the amount in full to avoid incurring high interest rate charges.
If its something that I need and I can afford to buy with cash, and they are offering 0% interest cc installment, I would take it. It like free money.
Same as income tax Giro allows u to pay over 12 months, and property tax. Compare to lump sum payment, this is free money. Not a lot but the idea is there.
This is a business question.
Here are my thoughts.
If I am given an interest-free loan of 0% for 12 months, I would free up my capital for safety net and other expenses should the need arise.
I am not a firm believer in having debt, however, I would not dismiss the fact that everyone's portfolio should include debt as part of their portfolio.
Having debt and using it wisely will increase your ability to have better liquidity as well as having the ability to grow faster. Provided that the utility for the liquidity has a high certainty of interest receivable.
Debt is a product and a tool which requires understanding before you utilize it. Just like any other financial asset class or product.
As a prudent guideline, only take loans with 0% interest if you have the full ability to pay off 100% of the loan. I have many clients who went this route and they have never regretted it given the highly favorable nett cost of a loan given to them by their bankers.
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I am divided on the opinion but nay.
In a nutshell, there will be some admin fee involved, even if the merchant has some arrangement with the bank. Just check with the merchant and/or bank first before making the transaction.
Unless you place the money saved in some high yield places, spending extra money for something you could have paid off fully don't make a lot of sense. Also, even if you place it in high yield places, the extra money earned still needs to repay the already incurred admin fee. So it is up to you if the net money earned is worth the hassle.
Debts can be used for good or bad.
Having zero interest instalment plans are fine with me. As due to the time value of money, I prefer to use the money to grow my income than paying the item off in one go. In a way, I will only use such plans when I know I have the money in the first place and it is used to improve my cashflow.
However, don't use it when we are spending on unnecessary stuff and never try to pay the interest payment and rollover the amount. You should know by now that credit cards interest is the highest all kind of debts. (i.e. >20%)
That's why use debts wiser, it can improve or destroy your financial status.
Cheers. Have fun in the money game.
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