By MoneyBees
Compare a credit card 0% instalment payment plan with paying in full and with revolving the balance, work out the EIR of a processing fee, and see how much credit limit the plan holds.
Yes, if you pay every instalment in full and on time, a 0% merchant plan costs the same as paying the whole price upfront, as MoneySense explains. A missed instalment brings card interest and a late fee.
The bank holds the full purchase price against your limit on the day you buy and releases it as each instalment is paid, under DBS's, OCBC's and UOB's terms. A S$2,400 purchase on a S$10,000 limit leaves S$7,600 to spend at first.
The overdue instalment is treated like any unpaid card balance. DBS, OCBC and UOB charge a S$100 late fee when the minimum payment is missed, and card interest of about 27.8% a year applies to the overdue amount.
You can, but DBS, OCBC and UOB each charge S$150 to cancel or end a plan early. UOB's agreement says paying the balance in full early counts as ending the plan.
A 0% IPP is set up at a participating merchant when you pay. Converting a purchase you already made, such as DBS's My Preferred Payment Plan or OCBC PayLite, charges a one-time processing fee, which the banks quote as an EIR of about 6% to 18% a year depending on the tenure.
As the yearly rate that makes the fee and the equal instalments worth the price you borrowed, with the fee billed alongside the first instalment. On that basis a 5% fee over 12 months is an EIR of 9.50%, as DBS and OCBC publish.
Yes. MoneySense notes the unpaid portion is counted as a debt in your name, and you must keep paying even if the merchant closes down.
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