Westpac announces new credit card instalment option – how does it stack up? 

Due for release in coming months, Westpac’s PartPay will be available on all of the bank’s credit cards, with the exception of its Flex credit card.

Customers who opt into PartPay will receive a digital card in addition to their usual credit card. This will give them two options to pay at the point of sale – either via their credit card or via their PartPay digital card.

Customers who opt for PartPay will make an upfront payment at the point of sale, followed by three fortnightly payments, which come out of a nominated bank account automatically.

This will see customers pay off the purchase in full over six weeks, similar to the Afterpay model.

Like many buy now, pay later (BNPL) platforms, PartPay will charge no interest and no additional fees. However, if any of the automatic repayments bounce, the instalment goes on to the person’s credit card where it will attract interest charges immediately.

While the instalments come directly out of a customer’s bank account, the money owed on the PartPay platform forms part of the customer’s overall credit card limit.

Credit card instalment plans – what’s currently on offer?

Credit card instalment plans are nothing new. The RateCity.com.au database shows there are currently 16 providers offering credit card instalment plans, including from CBA, Westpac, ANZ and Amex. Contact us for full list.

However, most providers’ payment plans only offer this option after an item is bought, rather than at the point of sale. This is where Westpac’s PartPay is more closely aligned to many BNPL services.

How does Westpac’s PartPay stack up against some of the big BNPL players?

Source: RateCity.com.au

Note: At the time of writing, not all BNPL companies carried out credit checks before approving new users. However, things will change in the near future.

The government has announced its plan to amend the National Consumer Credit Protection Act to include BNPL companies as credit providers. Under the new regulations, all BNPL providers will need to obtain an Australian Credit Licence and comply with responsible lending obligations, such as running hard credit enquiries on prospective users. These changes are aimed at protecting consumer interests and promoting transparency in the lending industry.

What the big banks currently offer to challenge the buy now, pay later sector

Each of the big four banks have at least one product that targets the BNPL sector, with CBA and NAB now offering the service directly.

Source: RateCity.com.au

RateCity.com.au research director, Sally Tindall, said: “Westpac is adding yet another string to its bow in the ongoing battle between credit cards and the budding buy now, pay later sector.”

“Providers have been working hard to turn the traditional credit card into a millennial must-have. This new offering from Westpac is the latest iteration of this,” she said.

“By offering four equal instalments and a digital card for use at the point of sale, Westpac’s PartPay is a direct challenge to the BNPL sector.

“The key difference is that customers must have a Westpac credit card already in their wallet, which comes with higher credit limits, but also stringent credit checks.

“This new instalment option could help some customers pay down their debts faster than they might using a credit card, which only forces you to pay as little as 2 per cent of your debt.

“However, if you miss a repayment using the instalment option, you could find yourself paying interest faster than if you had opted for your credit card, if you still have access to your interest free days.

“Customers looking for credit might be spoilt for choice these days, but their heads are likely to be swimming from the fine print that comes with each different option.

“If you are wedded to the idea of buying something and paying for it later, find a platform that offers a credit limit you’re comfortable with and understand the implications of missing a repayment.

“Most importantly, stick to one platform at a time so you can stay on top of what you owe and make sure you have enough money to last the month.

“Buy now, pay later platforms might have relatively low credit limits but if you’ve got multiple accounts on the go, your debts can suddenly start to get out of hand,” she said.

What to look out for if using credit

• Stick to one form of credit at a time: Spreading purchases across multiple platforms can make it hard to keep track of what you owe and when it is due.
• Pay your debts back as soon as you can: Whether you’re using a credit card or buy now, pay later service, make sure you clear your debts in full before you get stung with late fees or interest charges.
• Watch out for overdraft fees: Repayments on BNPL platforms are typically automatic, which means if you don’t have enough money in your account you could end up going into overdraft with your bank.
• Keep money in the tank for the important things: Defaulting on your rent, your utilities bills or your mortgage can have serious consequences. Make sure you have enough to cover these bills, and essentials such as food.
• Spending more to get points: If you’re spending more just to earn credit card rewards points then your card might have gotten the better of you.