Mastercard® Now Offers Installment Plans for Cardholders

Mastercard® Now Offers Installment Plans for Cardholders

September 15, 2020         Written By Heaven Speirs

Wouldn’t it be nice if you could separate your big purchases from everyday credit card purchases? That way, you could pay off the balance for your small transaction and treat the bigger purchase like a loan. Thanks to a new partnership with TSYS, Mastercard users can now create an installment plan for purchases before, during, or after checkout.

Three Ways to Buy Now, Pay Later

Mastercard® has three different types of installment plans for credit card purchases:

  • Pre-Sale: Cardholders can request a specific dollar amount for a certain category and use that as a ‘loan’ for a purchase. For instance, you could choose a $500 installment for home improvement purchases. Consumers also have the option to set up an installment plan with specific retailers, including automatic payments.
  • Point of Sale: Cardholders can turn their purchase into an installment agreement directly after checkout or activate an installment plan while they shop.
  • Post-Sale: Cardholders may receive an installment plan offer from their issuing bank after the transaction is complete.

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The timeframes, payment amounts, and interest rates for the installment plans vary by the cardholder and issuing bank. If you have a Mastercard® credit card or would like to apply for one, be on the lookout for these offers in your card’s mobile app.

Consumers Are More Likely to Buy When Installments Are Available

Studies show that consumers are more likely to make a purchase or spend more money on a purchase if they have a hassle-free installment plan available. Mastercard’s research reveals that nearly three-quarters of consumers prefer integrated installments with their existing cards, rather than a separate loan for the transaction. It all comes down to simplicity. Why mess with yet another payment when you can handle it all through a platform you’re familiar with?

Back in 2018, Klarna found that 75% of consumers would choose an online merchant that offered instant financing over a merchant without instant financing. Mastercard® has turned this into reality across many merchants, both online and in-person. Best of all, consumers don’t have to commit to an installment plan before purchase. If they decide afterward that they’d be better off paying for the transaction in increments, they can select an installment plan that doesn’t interfere with their day-to-day purchases.

The Smart Way to Handle Credit Card Installment Plans

Whether you choose a Mastercard® installment plan or a third-party loan option, it’s important to manage it well. Here are some quick tips to preserve and even improve your credit with installment arrangements:

  • Know what you can afford before you make an agreement. If you only have $100 to spare each month, don’t agree to a $300 installment payment. Set a monthly budget to realistically accommodate the installments, and stay within said budget.
  • Make your payments on time each month. If you have an automatic payment option, that’s even better. It ensures that you never miss an installment, and it’ll protect your credit.
  • Understand the terms of the installment arrangement. For instance, you may have the option to get 0% financing for a certain length of time. If you pay off the balance within that timeframe, you’ll save more money than paying for the full length of the term.
  • Be cautious with spending until you’ve paid off your balance. You can still use your credit card for other purchases, but be strategic with your money. Carrying a balance will only cost you more in interest down the line.
  • Don’t use installments as an excuse for unnecessary purchases. This is a debt trap waiting to happen. If you truly need the item and want an installment plan to pay it off, go for it. If you justify the purchase purely because of the installments, you’re better off saving for a future date.

If you need help finding the right credit card, use the Low Cards Credit Card Selection Tool to get started. The process only takes a few seconds, and we’ll match you with the best credit card offers to meet your needs.

The information contained within this article was accurate as of September 15, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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heaven

About Heaven Speirs

Heaven Speirs is a contributing writer for LowCards.com. She remains up-to-date with the latest developments in the credit card industry and the financial sector as a whole. Heaven has over 10 years of experience in online journalism, the bulk of which has been focused on personal finance. Heaven attended Oklahoma State University, where she discovered her talent for research and content creation. In her spare time, Heaven enjoys painting, playing poker, and spending time with her husband and three dogs.