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Who offers installment plans in Canada
Installment plans date back as far as the 1920s and, in the last several years, installment plans have had quite the resurgence with fintechs like Square, Sezzle and Affirm offering this service, and partnering with many major retailers to allow their customers to buy now and pay later. (Square, however, has currently paused their installment payment program during the COVID-19 pandemic). Among Canadian options, PayBright lets approved Canadian consumers pay using an installment plan at participating retailers like The Source and Samsung, and CIBC launched its CIBC Pace It feature on credit cards allowing for low-interest installment payments on eligible credit card purchases in September 2019. Note that CIBC Pace It is not available to Quebec residents.
How do installment plans work on a credit card?
You can easily use a credit card to make a big purchase or pay for something unexpected, but credit card interest adds up if you aren’t able to pay off your balance quickly. As a less expensive option, installment plans are now available on eligible CIBC credit cards with the CIBC Pace It feature. It allows you to convert a single eligible purchase of $100 into an installment plan with an interest rate below their card’s annual interest rate. Note that separate purchases can’t be combined into a plan; you have to create a new one for each purchase that qualifies.
“It’s a great way to plan your purchases and repay them at a low interest rate,” says Jennifer Davidson, vice president, cards product management and benefits strategy at CIBC.
How CIBC Pace It Installment Plans work
Set up an Installment Plan via CIBC online or mobile banking in three simple steps. First select an eligible purchase your transaction history, marked with an “Eligible for Installments” label. Next choose from the the plans based on what works for you: six monthly payments at 5.99%, 12 monthly payments at 6.99%, and 24 monthly payments at 7.99%. Finally, agree to the Terms & Conditions, and you’re all set.
Davidson explains that one handy feature is the ability to see how your payment amounts will change depending on the time frame you select. “And then just have that conversation with yourself to say, ‘Can I afford that amount?’ because if you can commit to that, then you can take advantage of a much better rate.” You’ll be charged a One Time Installment Fee of 1.5% of the purchase price.
Your monthly payment appears as part of the minimum payment and amount due on your credit card statement, so you only need to worry about making one payment to your credit card. If you miss a payment moving forward that principal is charged at your credit card’s regular rate, while the rest of your installment plan continues. Plus you can also cancel a CIBC Pace It installment plan if you no longer need it.