Aside from the convenience of swiping and the luxury of perks, one great thing about owning a credit card is availing credit card installment plans. And these payment plans aren’t that hard to find, either. Most banks in the Philippines offer flexible terms, low interest rates, and other special promos to sweeten the deal.
But is it really a good idea to avail a credit card installment plan? On paper, it’s a great way to pay for almost anything. But you’ll be surprised how it can also be disadvantageous at times. Here are the pros and cons you need to consider before you avail a credit card installment plan for your next purchase.
Pro: Convenient way to buy expensive items
The concept of “buy now, pay later” will always be enticing, especially for the most budget-conscious out there. This is basically the main draw of availing credit card installment plans. After all, why would you fully pay for something when you can space out the payments monthly? And for big-ticket purchases, it’s almost a no-brainer to divide your payments.
And technically, you don’t need a credit card to avail an installment plan. But you’ll need to submit a bunch of requirements and not all stores offer such plans anyway. With a credit card, all it takes is a few swipes and maybe a couple of signatures here and there. And that’s it—you now purchased something of value without shelling out a single cent. All swipe, no fuss.
Con: No rewards for installment purchases
If you’re a reward-seeker, then credit card installment plans probably won’t be your thing. After all, availing one implies that your credit card’s bank will shoulder the full expense. So you basically owe the bank for the purchase. Why would they reward you for that? Sadly, you can’t have your cake and eat it too. Consider this when you’re thinking of going this route.
Pro: Save your money for other needs or wants
Since you don’t need to pay full price for your big-ticket item, you can then allot your money to other needs or wants. Need a brand new laptop but still want to set aside a budget for this month’s groceries? Bust out your credit card and solve two problems with one swipe. Having a credit card allows you to manage how much you take out from your wallet.
Or if you want to shop for more luxuries without spending most of your shopping budget, credit card installment plans can help you do exactly that. Want to upgrade your phone and buy new clothes without going over? Time to space out the payments and let your future self worry about it later. Just make sure you have enough to actually pay your credit card bills.
Related article: Best Credit Cards for Gadget Shopping in the Philippines
Con: Another monthly payment to worry about
Consider the amount of bills you’re currently paying. Utility bills will always be up there and you probably have internet and phone bills to worry about. Can you afford to worry about another set of monthly bills? Another thing to consider when availing credit card installment plans is your ability to juggle monthly payments. Don’t risk it if you think you’re not ready for it.
Pro: Earn more money from your purchase
This one benefits those who are planning to start a business or freelance job at home. Instead of spending a lot of money for equipment, you can instead buy what you need now and use your purchase to earn more money to pay it back. Basically, you need to make your purchase pay for itself.
For example, if you need an oven to make your home baking business a reality, you can choose to save money by buying one through your credit card’s installment program. And once business is booming, you can then use some of your earnings to pay your credit card bills. The satisfaction of clearing your debts with your hard-earned money is just icing on the cake.
Related article: 10 Best Credit Cards for Small Businesses in the Philippines
Con: Your financial future is uncertain
Nobody knows what the future holds. You can’t predict the next emergencies that can hinder you from paying your installments. This may include medical expenses, unemployment, or bad business profits, among others. If you’re not that confident about your financial capacity one month from now, then avoid availing credit card installment plans for a while.
Just like most things in life, availing a credit card installment plan comes with its own set of positives and negatives. The challenge now is to determine how you can use it to your advantage. Weigh all your options and consider all possible scenarios before you avail an installment plan. That tactic should apply to any financial decision you make.
This article was first published in The Manila Times on Sept. 19, 2020.
Read more about credit card basics:
- Need a Card? Here’s a Guide to Credit Card Online Application
- Applying for a Credit Card? Prepare These Credit Card Requirements First
-  Firms launch installment payment solution for online stores (Philippine News Agency, 2020)
-  10 things you can buy that pay for themselves (Business Insider, 2015)
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