Paying off a credit card balance is no easy feat, especially if you’ve just paid for a big-ticket item like a holiday or a wedding. While a credit card instalmenet plan can be a helpful option for some cardholders to pay off their card balances, it’s worth comparing a range of alternatives available.
Personal loans
If you’re looking for a fixed repayment schedule that will ensure a debt is paid off at the end of it, you may want to consider a personal loan. Unlike credit cards that allow you to make minimum repayments on a debt for the next 30+ years, personal loans ensure that debts are paid off through fixed loan terms, typically 1-5 years.
Personal loans also generally have lower interest rates than credit card purchase rates, meaning you could avoid snowballing your debt further through interest charges. You’ll just need to budget according to ensure you do meet all your loan repayments on time, or risk defaulting on the loan and impacting your credit history.
Balance transfer
Another option to consider is to utilise a balance transfer credit card offer. These credit cards allow you to transfer your outstanding balance to a new card typically charging zero interest for a set period of time - anywhere from six months to two years. This works similarly to an instalment plan in this way, but you cannot make any new purchases with the credit card, as your balance will immediately begin accruing interest at a higher purchase rate.
Buy now, pay later platforms
If avoiding interest charges is the name of the game, it could be worth considering switching to a buy now, pay later (BNPL) platform like Afterpay for your purchases. BNPL allows customers to make purchases that they then repay on fixed instalment plans - typically fortnightly payments for four or six weeks - without interest.
BNPL repayment terms are almost always much shorter than those offered for credit card instalment plans, so keep in mind that they’re designed for smaller purchases, and may offer much lower credit limits. While interest is not typically charged, there are a range of fees that providers may charge you with, such as late payment fees or account-keeping fees.
