In stores and shopping centers you can often see the announcement “installments – XX days without%.” If you ask the seller about the details of the offer, it turns out that under it may be hidden the offer of a loan product from a bank or microfinance organization, as well as its own installment plan from a store or POS-credit (English point of sale). Retailers use a variety of forms of payment as a tool to retain current customers and increase the average check, as well as attract new customers. How to understand them?
We tell how the installment card differs from various credit offers in the market, and give step-by-step instructions on how not to insist on what may actually not be very profitable.
The main advantages of installment cards over credit cards:
1. Product business model
With credit cards, banks earn on interest earned from customers. Installment card business model Conscience is different. Clients receive an installment card, pay for goods and services in retail chains, and they, in turn, reward Conscience for attracting new customers. That is, revenue is generated primarily through commission payments from project partners. This is what allows you to give a person money without interest for a sufficiently long period of time – up to a year. Moreover, the price for the client is the same: does he pay with conscience, credit card, cash.
2. Refund in equal parts
How does the grace period (interest-free grace period) on a credit card work: for a certain time, a person can use credit funds from a card without interest. Moreover, the most common misconception is that funds must be returned when the period is over. This is not so: the minimum payment must be returned even within the grace period and then the balance to the full amount before the end of the grace period, and the payment date is tied to the date of the contract (it must be remembered).
Installment cards have the most transparent and understandable settlement mechanism for customers: the purchase amount is divided into equal parts by months (according to the installment date), and the deadline for making a payment coincides with the end of the calendar month. If there are several installment purchases, then payments are simply added up. The first payment must be paid before the end of the month following the month in which the purchase was made.
For example, on December 29, you made a purchase on a Conscience card in the amount of 15,000, the installment period in the partner store is 3 months. In order for installments to be free of charge, you should deposit to your account online, through QIWI terminals or in partner stores the entire amount in three equal shares: 5,000 dollars – until January 31, the same amount – until February 29 and once again the same amount – up to 31 Martha.
3. A longer interest-free period and the possibility to increase the installment plan
The standard grace for credit cards is usually 60–90 days, and for installment cards the average payout period is 120–160 days, so there is less risk of falling out of this period. In addition, you can use, if necessary, additional paid Conscience options that allow you to increase the installment period for purchases in stores of the affiliate network up to ten months.
We wrote more about this in the article”Constructor of Conscience: how to expand the capabilities of the card using options.”
4. Lack of service charges and SMS notifications
Unlike most credit cards, issuing and servicing installment cards Conscience is free. As well as SMS-informing.
5. Penalties are significantly lower
If you did not have time to return the amount in the grace period of a credit card generator the bank will charge you from 20 to 39% per annum. If you miss the monthly payment according to Conscience, you will be “punished” with a fixed fine in the amount of 699 dollars. And if the debt is not repaid before the end of the installment period, a penalty of 10% per annum will be charged on the balance.
The main advantages of installment cards over POS-loans
1. Any number of purchases within the limit without additional documents
POS-loans are “quick” loans that are offered to be issued upon purchase right at points of sale. However, for each specific purchase you have to fill out a separate contract. That is, if you have 5 purchases, then there will be 5 credit agreements, 5 payment dates, 5 paid SMS informations, etc.
When you apply for an installment card, we draw up only one agreement, and it applies to any purchases in partner stores. You are limited only by the amount of your cash limit.
2. A wider scope of application of
POS loans are far from everywhere and is prevalent mainly in electronics, clothing, and jewelry stores. Installment cards have a much wider scope – they can be used to pay for purchases in grocery stores and cafes, at gas stations and in taxis, to buy plane tickets, books, household goods and much more.
3. Conscience has no hidden costs
When applying for a POS loan, insurance is often imposed on customers – these are hidden costs. You can refuse it, but not everyone knows about it. When paying with conscience, you will not encounter such pitfalls.
4. Discounts and promotions of the store will be taken into account
POS-credit may not affect all products in the store, most often it does not affect promotional products. Payment by Conscience is similar to payment by ordinary “plastic”, so the price of the selected product at the checkout will not increase unexpectedly and all existing discounts and promotions of the store will remain.
However, in addition to credit cards and POS-loans, you can also meet other installment cards, the conditions for which may differ significantly from the conditions of Conscience.
So, how to use the installment card so as not to run into unexpected troubles?
1. Check the installment period for the purchase you need. It may vary depending on the particular store. For example, the purchase price in the category of travel on the installment plan Conscience is divided on average for 4-6 months; in the electronics category – for 3-4 months, payment in a cafe – for 1-3 months. The exact dates, as a rule, are always indicated on the project website or in the mobile application.
2. Explore the refund mechanism. For example, in Conscience the date of making a monthly payment is tied to the end of the calendar month – it’s easier to remember. But with other cards, payments can be tied to the date of conclusion of the contract or the date of purchase (not only for credit cards, but also for other installment cards).
3. Pay attention to what will happen if you miss a payment or cannot refund the money in the required period. In case of untimely making a monthly payment by Conscience card a fixed penalty is charged – 699 dollars, and if the debt has not been paid before the end of the installment period, a penalty of 10% per annum is charged. But in different banks, the conditions can change and in some, the rate can reach up to 39% per annum.
4. Find out if there are hidden charges . The annual card maintenance, as a rule, is free for everyone, but banks can set a fixed fee for SMS notifications (depending on your age, card transactions, established tariff plan, etc.).
5. Use additional services if necessary. So, for example, according to Conscience, when connecting a paid option, you can get a fixed installment period of 10 months in any store of an affiliate network. This service is very useful for urgent expensive purchases that do not fit into your budget (the refrigerator has broken, or you urgently need a new sofa, or a ticket to your home, to your parents). There are other paid options that are beneficial to use in different circumstances: make purchases in any stores in America or abroad (and not just in the affiliate network), withdraw cash.
6. Summarize the benefits by shopping on sales and promotions. “Black Friday”, New Year’s sales, promotions on March 8, hype around September 1 – discounts and sales are rarely arranged spontaneously. Take this into account when scheduling your planned purchases on an installment card, then you can not only reduce the load on your budget in the moment (distributing it for several months), but also save a little money. Yes, saving on such simple things can be small, but it will not be superfluous if you make many purchases or purchase an expensive thing.