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Credit Card Installment Plans: Should You Buy Now and Pay Later?

Feb. 5, 2021
10 mins
A woman sits in front of her computer with her credit card in one hand and a coffee on the table

Many of Canada’s leading credit card companies now offer payment plans to help cardmembers pay for larger purchases in installments — often with no additional credit checks or approvals required.

Learn how to create an installment plan and if this solution is right for you.

MBNA Payment Plans

Plan details

Eligible MBNA credit cards now offer more flexible ways to pay. Cardholders can choose an eligible purchase of $100 or more from their online account to start.

Users then select the MBNA Payment Plan that works for their needs. Options include 6-, 12- or 18-month terms.

The annual interest rate is 0%; however, cardholders will pay a plan fee.

Once users have read the program terms and conditions, they can complete the process.

Term 

Fee* 

6 months 

Plan fee: 4 

Annual Interest Rate: 0% 

12 months 

Plan fee: 6% 
Annual Interest Rate: 0% 

18 months  

Plan fee: 8%  
Annual Interest Rate: 0% 

*Conditions apply. 

**This offer is not available to residents of Quebec. 

How it works

Here is a scenario illustrating how the MBNA Payment Plan works:

If you purchase a couch for $1,200 and choose an MBNA Payment Plan with a 12-month term, the program fee would be 6% of the purchase price, giving you a $106 monthly payment. That means the total cost of the couch would be $1,272.

Purchase price 

MBNA Payment Plan term 

Plan fee

Monthly payment amount

Total paid

$1,200

12 months

6%

$106.00

$1,272

Although the couch would cost you $72 more than the original ticket price, the monthly payments would be smaller and more manageable.

Eligible credit cards

Most MBNA credit cards are eligible for MBNA Payment Plans, except for low-interest rate credit cards (interest rates less than 12.99%).

Here are a few of the eligible cards:

If your card offers the Payment Plan feature, you will see it in your online banking.

What you need to know

Only primary cardholders can use the MBNA Payment Plan feature, and transactions can’t be combined. Users can have up to 25 MBNA Payment Plans active at one time.

Setting up an MBNA Payment Plan will not affect your credit score. However, if you neglect to pay at least the minimum payment due, the 0% interest rate will no longer apply to the remaining balance. The interest rate for purchases will apply. The interest rate for purchases is higher than payment plan interest rates and may be the default rate for purchases if such a rate applies to your account.

If you miss two consecutive payments, your account can go into default, and your credit score may take a hit.

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CIBC Pace It™

Plan details

CIBC credit card clients can convert eligible purchases of at least $100 into installment plans at lower interest rates over 6, 12 or 24 months.

Related read: Is CIBC’s New Installment Offer Pace It Any Good?

Primary cardholders can create an installment plan through their online banking or mobile app. First, they choose the eligible purchase, then review the installment plan options. A one-time fee of 1.5% of the purchase price does apply.

Term 

Fee* 

6 months

Installment fee: 1.5% of the purchase amount

Interest rate: 5.99%

12 months 

Installment fee: 1.5% of the purchase amount

Interest rate: 6.99%

24 months 

Installment fee: 1.5% of the purchase amount

Interest rate: 7.99%

*Conditions apply. 

**This offer is not available to residents of Quebec. 

How it works

For example, if you purchase a fridge for $1,200 and choose a 12-month term, you will owe a one-time payment of $18 and accrue interest at a rate of 6.99% on the $1,200 converted into an installment plan. Your monthly payments would be just over $100, and the fridge would cost you approximately $63.96 more than the purchase price by the time you pay it off because of the plan interest and fees.

Purchase price 

Term 

Plan interest and fees

Monthly payment amount

Estimated total amount paid

$1,200

12 months

6.99% interest


$18 one-time installment fee (1.5% of purchase price)

$103.83

$1,263.96

The CIBC Pace It feature would save you roughly $69.94 over the same period using a standard credit card with a 19.99% interest rate, and the monthly payments would be smaller and more manageable.

Eligible credit cards

The CIBC Pace It feature is available on most personal CIBC Visa credit cards. Here are some of the eligible cards:

Create an installment plan through the CIBC app or the online banking portal.

What you need to know

Primary cardholders can set up installment plans, including purchases made by the authorized user. Though, authorized users can’t convert transactions into installment plans of their own.

If users neglect to pay or only partially pay the monthly minimum installment due, the standard interest for purchases applies to that unpaid portion. The rest of your installment plan continues at the installment interest rate and is not cancelled.

Plan ItTM from American Express

Plan details

Members of qualifying American Express credit cards can create installment plans for $250 or more using amounts from their most recent statement.

They can choose the plan that suits their needs from three available options. The terms range from 3, 6, 9, and 12 months and vary depending on each member’s balance amount and account history. Lastly, users review the terms and conditions of the installment plan and confirm. A fixed monthly fee does apply.

Although American Express offers a Plan ItTM Calculator via their website to help illustrate the monthly cost, plan options and fees may vary by card.

Term 

Fee* 

3 months

Monthly fee: 0.90% of the principal amount

6 months 

Monthly fee: 0.90% of the principal amount

9 months 

Monthly fee: 0.90% of the principal amount

12 months  

Monthly fee: 0.90% of the principal amount

*Conditions apply. 

**This offer is not available to residents of Quebec, Nova Scotia, Nunavut, and Prince Edward Island.

How it works

If, for example, you need to replace the timing belt in your car for $1,200, and you choose to pay using your American Express credit card, you may be eligible for the Plan It program.

You log into your account and see the option to create a plan — selecting a 12-month term. The plan’s fee is calculated at a rate of 0.90% of the principal amount, charging you $10.80 per month instead of interest.

Splitting the purchase price over the term leaves you with 12 equal payments of $100. Adding the payment and monthly fee together gives you a total monthly cost of $110.80.

Purchase price 

Plan It term 

Plan fee

Monthly payment amount

Total paid

$1,200

12 months

$10.80/month

$110.80

$1,329.60

The timing belt would cost you $129.60 more than it would from paying upfront; however, the installment plan offers a flexible way to pay for the larger purchase.

The Plan It program does not offer special rates; therefore, the cardholder would owe approximately the same amount as they would using a standard credit card with a preferred interest rate for purchases (typically 19.99%).

Although installment plans can help cardholders better understand how much they owe each month and plan for the fixed payments.

Eligible credit cards

Many of the personal American Express credit cards feature the Plan It program. Here are some of the cards:

To see if your card is eligible, log in to your American Express app or online account.

What you need to know

Primary cardholders can use eligible balances from additional cardholder’s transactions to create installment plans. The additional cardholders can’t choose plans of their own.

The installment amount will appear as part of the minimum payment due on the statement, and it must be paid to keep the account in good standing. If a user misses a payment, American Express will automatically cancel the installment plan, and the remaining amount will be added to the standard credit card balance.

Financing with Triangle™ Mastercard®

Plan details

The TriangleTM Mastercard® from Canadian Tire allows users to finance bigger purchases from participating retailers through Canadian Tire Bank®. Users can split purchases of $150 or more into 24 equal monthly payments, with no fee and no interest.

Term 

Fee* 

24 months

Annual Interest Rate: 0%

*Conditions apply. 

How it works

Here is an example:

If you finance a treadmill for $1,200 over 24 months, you will have a monthly payment of $50, given the 0% interest rate. That means the total cost of the treadmill would not be any more than the original value. Plus, users earn Canadian Tire Money on their purchases, even when financing.

Purchase price 

Term 

Plan fee

Monthly payment amount

Total paid

$1,200

24 months

$0

$50

$1,200

As long as you pay the minimum amount due on time and in full, you can avoid interest or fees.

Eligible credit cards

All three Canadian Tire credit cards offer no-interest financing for eligible large purchases made at participating retailers.

Canadian Tire offers the following cards:

Cardholders can choose to finance their purchase through the online checkout or the cashier.

What you need to know

If cardholders miss one of their payments, the remaining balance will be subject to regular interest rates. Users would no longer have the privilege of paying in equal installments.

Is an installment plan right for you? 

Before choosing an installment plan, make sure to read the fine print and consider all the payments and fees.

Ask yourself the following questions:

  • Will you be able to afford the monthly payments?
  • Is your purchase worth the extra interest charges or fees?
  • Are there any alternatives?

It is best practice to pay off your credit card balance at the end of each billing period and only buy items you can afford. Though sometimes that is not possible — you may need to address large unplanned purchases like replacing your water heater or a fridge right away.

An installment plan can help you buy now and pay later, at a more manageable pace. But make sure you can afford the payments. Missing payments can run the risk of your account falling into default, and it could affect your credit score.

Having an emergency fund is an ideal way to pay for unexpected expenses. Saving $50 a month for 24 months (two years) would net you the $1,200 needed for each scenario above.

Low-interest rate credit cards can also help users avoid costly interest charges. Some credit cards have interest rates as low as 8.99% in Canada. Using one of these cards can ensure you accrue less interest than a standard credit card when carrying a balance for the short-term.

Lastly, users typically can’t make changes to installment plans when confirmed. Although plans can usually be cancelled, many cannot be reactivated once cardholders choose to do so. Make sure to select the program that will suit you best before signing up and thoroughly understand the conditions.

If used responsibly, installment plans can offer people a flexible, convenient way to pay for larger purchases in smaller, budget-friendly amounts.

Rates, product information, and reward estimates are subject to change at any time and do not constitute financial advice. This post was not sponsored. The views and opinions expressed in this review are purely those of RATESDOTCA. Information in this article is accurate as of the date of this posting, February 5, 2021. Read our full disclaimer.

Hayley Vesh

Hayley Vesh is a creative, resourceful, and knowledgeable content producer who is passionate about financial literacy, storytelling, and generating ideas. She writes about credit cards, savings, debt management, and personal finance. In her spare time, Hayley can be found wandering in the woods, hunting for second-hand treasures, or curled up with a steeped tea and a good podcast.

Find Hayley Vesh on LinkedIn.

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