How Does Credit Card Installment Work in the Philippines?

This type of payment strategy helps you avoid having to pay the full amount upfront. Instead, you can make monthly payments that are a fraction of the total cost of the item or service until you’ve repaid it in full.

Suppose you need to buy a new phone. You can apply for an installment payment plan so that the entire amount won’t be charged to your next bill. The merchant will calculate how much you’ll need to pay each month and for how long. Then, you’ll just need to make the payments until the full amount is paid off.

If you’re interested to learn more about how credit card installments work in the Philippines, continue reading below.

What is a credit card installment plan?

A credit card installment plan is a payment arrangement where you make monthly payments toward purchases you’ve made. Instead of making a complete, one-time cash payment on your credit card, you pay for your purchases in equal amounts over a specific number of months.

Banks may or may not charge an interest fee on the installment plan, but they usually base their decision on the duration of your repayment. Credit card installment payment plans are also known as deferred interest plans because interest may be charged if you don't pay off your balance by the time the repayment period ends.

Fixed payment terms can range from 3 to 36 months, but banks will often let you choose your own terms if you have good credit.

How does credit card installment work?

You can avail of credit card installment plans via multiple channels or methods.

1. In-store

If you're shopping in-store, you can charge the item to your credit card and then convert the payment method to installment later through the bank’s website or app. Some card issuers also partner with merchants, enabling them to process installment payments in-store. In this case, all you have to do is tell the cashier that you want to pay in installments. They will then swipe your credit card, set up a payment plan, and tell you how much your monthly payment will be.

2. Online

An online credit card installment payment will typically require a minimum spending amount before you can avail of an installment plan.

If you’re eligible for this option, click “Proceed to Checkout,” choose credit card as the payment, then select your Payment Term. The monthly amortization will appear on the screen, which lets you determine how much you need to pay every billing cycle.

3. After purchase

For RCBC credit cardholders, you can convert your credit card purchases to installment easily through the RCBC Digital App. There is a 0% installment option for three months via the UNLI 0% program. You can also opt for longer payment terms of up to 36 months at minimal rates.

What’s great about UNLI 0% is that it has no minimum amount for conversion, meaning you can convert all your purchases to installment payments.

Things to Know Before Getting a Credit Card Installment Plan

As with other financial decisions, you should consider various factors to determine if a credit card installment is suitable for your situation.

1. Credit card installments may have additional service charges

If you’re looking to pay your credit card balance in installments, you may have to pay additional fees. Some issuers charge a processing fee for installment purchases, but it’s a small price to pay considering they don’t charge you interest.

Most issuers will offer an upfront fee that covers the cost of interest for the first three months of payments. This means that if you choose to pay in installments, you won’t have to pay any interest during those three months—you will only be charged the upfront fee.

2. Installment purchases may not be eligible for rewards

One thing to keep in mind is that installment purchases may not be eligible for rewards. So, buying something in installments won't count toward your rewards points. However, all your regular, unconverted payments will still count.

3. Having a good credit rating increases your chances of approval

If you've ever applied for a credit card, you know how important your credit score is. Not only does it determine whether you get approved for a loan but it also affects how much interest rate you'll pay on that loan.

With that said, your issuer is more likely to approve your installment conversion request if you have a history of making on-time payments.

4. Installments mean fixed, monthly payments

Fixed monthly payments are easier to manage since you already know how much you need to set aside every month.

You can also consider the installment amount when choosing a payment term. If you choose a large amount, your required monthly payment will be higher, but you'll pay off the balance much faster.

If you choose a smaller amount and spread it out over a longer period, you'll pay less in interest but it will take longer to fully settle your account. Here, you want to make sure you choose the right installment plan to avoid unpaid credit card debt.

Leverage Credit Card Installment Payments

If you're a credit cardholder, you could consider getting an installment payment plan to make big purchases easier on your wallet. But before you do, double-check the terms and conditions to make sure the repayments work in your favor.

If you’re looking for an ideal installment plan, check out RCBC Bankard’s UNLI 0% program. Our 3-month installment plan has zero interest, making it easier for you to make major purchases. Learn more about our installment program on the RCBC Digital App today.