Virgin Money launches credit card instalment plans
Virgin Money says the scheme is ‘an alternative to buy now pay later providers’. However, the instalment plans work in a very similar way.
Virgin credit card customers can set up to 10 instalment plans, with repayment terms of three to 36 months, at any one time on their credit card for any purchase of more than £250. Instead of paying interest on the debt, borrowers will pay a fixed fee which will be repaid over the term of the plan.
Fees vary depending on value and number of instalments, but Virgin says the average customer would pay £10 to borrow £250 over 12 months and £120 to borrow £1,000 over 36 months. It says the typical APR on an instalment plan would be about 7%.
When a borrower takes out an instalment plan, Virgin Money will confirm the monthly payment – this will be the same each month and is called the ‘requested payment’. This figure is calculated by adding the total instalment plan fee to the plan amount and dividing that by the months in the plan.
For example, if you borrowed £300 over 12 months for a £10 fee, you’d pay £25.83 a month for 12 months.
If a customer fails to make a monthly instalment plan payment, the amount unpaid will no longer be part of the instalment plan and they’ll start being charged interest on that amount.
Virgin Money says it may cancel a customer’s instalment plan if they don’t pay the requested payment three times during the instalment plan, or if it believes ‘as a responsible lender’, it is ‘necessary to cancel the plan’.
If any instalment plan is cancelled, you’ll be charged interest on what is left on your instalment plan at your standard interest rate.