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Installment plan for a credit card transaction

Last Edit: 18/10/18

Some credit card providers provide the option of creating an installment plan to pay for larger purchases. The installments are typically a fixed monthly amount. It is at the decretion of the credit card company which transactions qualify for an installment plan; Barclaycard currently has a minimum amount of £495 that can be moved to an instalment plan. If an installment plan is offered to card owners, it will have an end date after which the plan will no longer be available. Some card providers, such as RBS, inform customers if an installment plan is available via their mobile banking app. If a card owner is eligible to move a transaction to an installment plan, the card owner will typically have to pay a monthly installment plan fee, on top of the fixed instalement payment. For the rest of the account balance, card owners will have to pay their standard minimum payment on top of the installment plan payment.

So, what will happen if you miss an installment plan repayment? the most common approach to this scenario, is that the credit card company will move the installment plan payment and fee into the account balance of the credit card, and it will then be subject to interest (usually at the standard purchase rate for the card in question). Some card providers may issue a late / missed payment penalty fee, and missing the payment may affect the card owners credit rating. Another problem can arrise if the card owner misses 2 or more installment payments, because some card providers will then move the entire installment plan balance into the account balance of the credit card; making the entire installment plan balance subject to interest. However, it should be noted that credit card companies differ in how they handle missed installment plan payments, but it is usually handled in a manner outlined above.

It is usually possible to cancel an installment plan whenever a card owner wishes to do so. If a plan is canceled, whatever is left of the transaction plan balance is typically moved to the account balance of the credit card, and is then subject to interest. It is sometimes possible to pay off an installment plan early, but some credit card providers will require the account owner to pay off their account balance before doing so. Another question posed, is, can a card holder have multiple instalment plans? the answer is yes, Barclaycard allow up to 10 plan at any one time. It is possible to overpay an installment payment, and card providers will typically use the overpayment amount to either pay off the installment plan balance or reduce future plan payments.

Providers of credit card installment plans include: Royal Bank of Scotland (RBS), Barclaycard, Halifax, American Express, and Citibank.