How Do Flexi Payment Instalments Actually Work? We Break It Down For You
Buy big ticket items with no worries!
Published for CIMB, 16 Jan 2023, 10:04 AM
Ever heard of flexi payment instalments or plans?
ICYMI, these are plans that allow credit cardholders to make purchases and convert the payments into affordable monthly instalments. This comes in especially handy when buying a big ticket item.
Instead of paying upfront (or at the end of the month with a credit card), you get to split the payment into 6-month, 12-month, or 24-month plans, depending on your credit card issuer.
But how do these plans actually work, and do you end up paying a lot more over time? We break it down for you:
1. First things first, you'll need to check if there's a minimum amount you need to spend to qualify for a flexi payment instalment
Flexi payment instalment is offered by banks to ease the burden of their customers when it comes to purchases or payment that need to be made in a lump sum. This can be useful if you've got to pay for your children's college or university tuition fees, or even a sudden emergency medical bill.
The minimum spend may vary according to various banks, so check with your bank before making your purchase or payment.
2. If eligible, go ahead and make the purchase, then inform your credit card issuer you'd like to convert the payment into a flexi payment plan
Make sure to do this immediately or before the bank issues the next credit card statement. If you don't do this, you might get charged the full amount the next month.
3. Once your bank approves the conversion, the total amount will be blocked to your card's credit limit
For instance, if you buy a phone for RM2,000 and your credit limit is RM5,000, that means you'll only be allowed to spend RM3,000 more in credit.
As you pay the monthly instalments, your credit limit will gradually get restored. All in all, this means you can still use your credit card for other purchases, as long as it doesn't exceed the limit.
4. Depending on your bank, they would impose charges ranging from 0% p.a. up to 18% p.a.
With the amount of your purchase and period of tenure, the interest rate or facility charges may differ. It's good to have a check with the bank on their charges and see how much extra you'll end up paying at the end of your tenure.
For instance, if you purchase something at RM10,000 and the flat interest rate is 9.88%, you'll pay RM915.67 per month over 12 months, for a total of RM10,988.
This means you'll be paying an extra amount of RM988 from the original price, which is RM10,000. For some, it may seem like a big additional cost, whereas for others, it may be a worthwhile trade off in the long run.
With that being said, there are definitely pros and cons when it comes to flexi payments
The main con of flexi payment plans is that you'll end up paying more in the long term, but the pro is that it allows you to afford bigger purchases in manageable chunks.
Compared to a bank loan or financing, flexi payment offer more financial flexibility. There will be no supporting documentation required and no charges will be imposed for processing. Additionally, since it's a fixed monthly payment, you'll know how to set out your monthly budget and manage your expenses.
Want to split your bill into a 6, 12 or 24-month instalment with zero processing fee?
With CIMB's Flexi Payment Plan/-i, you can turn your purchases into fixed monthly payments — you don't even need any supporting documents!
All you have to do is spend a minimum of RM500 in a single transaction, then apply and keep an eye out for an SMS from CIMB to convert the purchase into Flexi Payment Plan/-i. Yes, it's that easy. :D
And, this is especially timely since there will be a lot of purchases made during the upcoming CNY period, like new furniture and decorations for the house, as well as gifts for your loved ones.
Psst... the plan is only available for CIMB credit cardholders. So, if you don't have a CIMB credit card, make sure to sign up for one now!
