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Over the last few years, installment plans have been gaining popularity among Canadians of all ages, from Gen Z to boomers. For many, the appeal of an installment plan (if you have this feature on your credit card) is that it gives you another way to pay for your credit card purchases and pay off your balance.
Let's dive into what it is and how it works.
What is a credit card installment plan?
A credit card installment plan is a way to pay for purchases made over a fixed period – through your credit card. It can help you to take control of your budget and manage your spending by providing flexible payment options on your credit card.
Instead of trying to come up with the money to pay off your credit card purchase in one lump sum, the installment plan feature - if included with your credit card - allows you to split your payments up over time - usually over three, six, or 12-month periods.
An installment plan also usually includes a fee, which can work in different ways like a monthly fee or a total upfront fee. Under these plans, you will know in advance what you will need to pay on each installment per month.
It’s important to not confuse a credit card installment plan with a "buy now, pay later" option. With credit card installment plans, because these payment options are a feature included on your existing credit card, you don’t need to do an additional application or credit check to take part. Note that not all credit cards include the installment plan feature but if they do you may wish to consider one for your next purchase.
There are different providers who offer these types of installment plans, including banks, merchants, and retail companies.
How does a credit card installment plan work?
Let's say your laptop stops working and you need to buy a new one for $600. You may not have an extra $600 sitting around but, you still need a new laptop in order to do your job. So, you put the $600 purchase on your credit card.
With a credit card installment plan, you can choose to convert an eligible purchase, paid for with your credit card, into several payments on your credit card. This means you can split up your $600 purchase and pay it back in multiple smaller installments based on the terms of your installment plan. You will need to pay your minimum payments each month for the installment plan and that amount is based on your specific purchase and the repayment period you choose.
If you choose a three-month term, then your $600 payment is divided into three equal payments of $200.
You are typically also charged an installment fee as part of the terms of the installment plan. This fee depends on your purchase amount and the length of the term you choose. For this example above ($600 computer purchase), your total installment fee is 2% on the original $600 purchase, results in an extra $4 per month.1 This mean that your three minimum monthly payments will each be $204. If the installment plan has no interest associated with it, then your total overall payment will be $612 (including the $12 in fees).
You can also use installment plans for larger purchases that you have planned, like a home renovation. When you are looking at all the expenses of your planned renovation, you can use an installment plan to manage your payments.
Scotia SelectPayTM
Scotiabank now offers an installment plan available on eligible Scotiabank Visa* credit cards called Scotia SelectPayTM. With Scotia SelectPayTM, there is a minimum purchase price of $100 but no maximum purchase amount. You can choose to have several active installment plans going at the same time. This can help you control your monthly budget while managing unexpected expenses, like car repairs, or larger purchases you may be making, like new appliances.
Benefits of credit card installment payments
A flexible and accessible installment plan on your credit card can be a helpful tool for making big-ticket or unexpected items more affordable.
Some of the benefits of using Scotia SelectPay include:
Interest rate – Enjoy a 0% interest rate during the payment period and a low plan fee.1
More control – Gain more control of your budget with fixed monthly payment plans.
Flexible payments – Take advantage of three, six, or 12 month payment plans. Full details of each SelectPay plan will be disclosed to you by Scotiabank when you ask for a SelectPay plan on your eligible Scotiabank credit card.
No need for additional products – You don't need to take out a loan or a separate lending product. With Scotiabank, your installment plan payments are available on your eligible Scotiabank Visa* credit card.
Easy sign-up – You can sign up online and manage your plan using the Scotiabank app or Scotia online.
Continued rewards – When using the installment plan, you will continue to enjoy all of the benefits of your Scotiabank credit card including earning rewards on purchases or insurance coverage on your purchases that are included with your card.
Simple and transparent pricing – There's no guessing when it comes to fees once you set up your SelectPay™ plan. You will see your total fee that is split and included in your monthly payments. This fee is a percentage of the total amount of your purchase.
Flexibility to cancel plan at any time – If at any point you no longer want to use the Scotia SelectPayTM plan, you can cancel without incurring a penalty fee on the purchase. The remaining outstanding installment balance will be re-applied to the balance owing on your Scotia credit card account and will accrue interest at the then current annual interest rate that applies to purchases on your account.
Who is eligible for a Scotia SelectPayTM Installment Plan?
You qualify for a Scotia SelectPay plan, if:
- You are the primary cardholder of an eligible Scotiabank credit card
- Your eligible Scotiabank credit card account is in good standing
- You made an eligible purchase of $100 or more (CDN$) with your eligible Scotiabank credit card account
- You reside in a province or territory in Canada other than Quebec
Is an installment plan the right choice for me?
Whether or not an installment plan is right for you depends on your financial needs and how you budget.
Like using any credit card, you want to make sure you use your installment plan (or plans) that are part of your credit card responsibly. It's important that you are not making purchases that will overly stretch your budget even if you want to use the installment plan on your card to pay that purchase. You will need to build the amount of your installment payments that are part of your credit card balance into your monthly budget so that you can pay them off on time each month and keep your Scotiabank credit card account and credit score in good shape.
You can talk with your Scotiabank advisor to find out if credit card installment plans are the right choice for you and your budget.
At this time, the Scotia SelectPay feature is not available to Quebec residents.
1. Actual “Monthly SelectPay fee” and “Total monthly SelectPay payment” will vary based on your specific SelectPay plan you have selected, including the applicable fees, interest rate, the actual purchase you convert into a SelectPay plan and the length of the term.
Scotia SelectPay is an installment plan feature (the “Plan” or “Installment Plan” or “SelectPay”) made available on eligible personal Scotiabank Visa credit card accounts (the “Eligible Account(s)”) that allows a primary cardholder to convert an eligible credit card purchase of at least CDN $100 posted to the Eligible Account to an Installment Plan with monthly payments over a fixed payment (the “Installment Payment Period”) with a fixed interest rate (currently 0% interest rate) during the Installment Payment Period and an Installment Fee that applies to that Plan (the “Installment Fee”). The Installment Fee may vary per Plan and the exact fee will be disclosed to you at the time you select the Plan.
Interest rate that applies is 0% for this plan and therefore no interest accrues during the Installment Plan but any unpaid remaining balance on your Installment Plan ( (the “Remaining Installment Amount Balance”) after the Plan ends or is cancelled by you or us will be re-applied to the balance on your Eligible Account. Your Remaining Installment Amount Balance is again eligible for an interest-free grace period. You will not pay interest on that Remaining Installment Amount Balance if we receive payment of the full balance (the “New Balance”) that appears on your statement in the month in which we re-applied your Remaining Installment Amount Balance to your Eligible Account. If you lose your interest-free grace period on the Remaining Installment Amount Balance, any applicable interest will then apply at the annual interest rate that applies to Purchases on your Eligible Account on that amount from the date of expiration or cancellation of the Installment Plan until that amount is paid in full.
Your Eligibility to convert an Eligible Purchase to an Installment Plan and the terms made available to you are subject to Scotiabank’s assessment at the time you request to convert your Eligible Purchase to a Plan. SelectPay is only available through the Scotia mobile banking app to primary cardholders on an Eligible Account (with no co-borrowers).
See the full Terms and Conditions for eligible Scotiabank Visa cards, eligible purchases and additional SelectPay terms and conditions. All SelectPay rates, fees and terms are subject to change.