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HSBC launches credit card instalment plans

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Written by: Emma Lunn
01/07/2021
The bank is offering its credit card holders a new payment option that it says will help them pay for larger purchases.

The new feature, called ‘Instalment plans’, is available through the bank’s mobile app and enables eligible credit card customers to convert recent spend into bespoke instalment plans. Customers can divide spend of at least £250 into three, six or 12 equal monthly payments.

The feature is interest-free but comes with a monthly fee. HSBC says this can be as low as £1.67 for a three-month plan repaying £250. The amount of the instalments and fees will depend on the plan amount and period, and it will be consistent each month customers have the plan.

Purchases of at least £100 can be amalgamated to meet the £250 minimum, and customers can have up to six plans at one time.

HSBC says instalment plans could help customers pay less for their borrowing as it will reduce the amount of interest they pay on their card. For example, a customer on a typical APR of 21.9% could save £99.16 by repaying £1,500 on an instalment plan compared to repaying it over the same period without an instalment plan.

HSBC says the instalment feature is designed to help customers spread the cost or purchases in a simpler way that gives customers more control. They can use their existing credit card limit, do not need to apply for additional lending and choose to use their card as normal or opt to spread the cost at any time.

To set up an instalment plan, customers can ask for a quote in the HSBC app.

Andrew Rankin, head of unsecured products at HSBC UK, said: “Customers have told us that they would welcome an option to repay their credit card spend in instalments and we are excited to launch these instalment plans. Enabling customers to spread larger payments into instalment plans and combine purchases made at different times will not only help them budget with a pre-defined monthly payment, they can also combine different items in one plan to help them understand their spend.

“For example, a customer may have a bought items of furniture from different shops, and combining them into one payment plan may make it easier for them. Customers may also find it helpful to pay for a higher cost individual item like a new laptop or phone.

“Splitting the cost into equal payments with a pre-determined end date and small fee may be preferable to them and gives them more flexibility. With clearly defined repayment terms, monthly and total costs, the instalment plan will help customers with their budget and give them more control of their finances.”

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