Installment with interest or without credit card: understand
December 8, 2019
Have you had difficulty understanding the true value of a split purchase? This is often a doubt, and depending on the store, it can make this information even more “masked.” Understand at once how to know if it is worth the installment with interest or without credit card.
Many stores print the installment several times very large, but the interest. There is the problem, the portion may seem small, but the end may not give any advantage to your purchase.
But we cannot generalize, there are different cases where interest may even pay off. Do you know when the seller gives you a discount on the cash value of the product? This discount is granted thanks to the interest already applied to the product, that is, even those who do not pay interest. Understand: installment with interest or without credit card.
Interest-free installment on credit card
This payment method is an installment option with no additional charge. The purchase has the same cash value, even in installments, that is, if you add the installments, it will be the same cash value.
In practice: If you think about buying a TV for your living room or bedroom, and this device costs $ 2,000 in the store. The installment can be made up to 10x without interest, ie 10 installments of $ 200.00. If we add the 10 installments, the amount will be the same $ 2,000 that would be paid in cash.
But as we said, the interest-free installment may not be worth it, as the cash payment may yield a discount. This discount granted is precisely the interest already calculated and it seems that we are not paying on the product.
Interest-free installment payment is worth it when the discount is small or even if the cash value compromises your budget, as the installment decreases the monthly amount.
Credit card interest installment
Contrary to what we have just explained, interest-bearing installment payments have an additional financing charge. Here lies the danger: the Total Effective Cost, ie how much you pay at the end of the installment.
In practice: Remember that TV you wanted for your living room or bedroom? She remains the same $ 2,000 in another store, but this one charges interest of 2% per month.
That is, if it is split in 10x, the portion rises to $ 222.65, resulting in the end of 10 months $ 2226.50. So, in reality, you will pay $ 226.50 more for the credit card installment.
Installment with interest or without credit card – conclusion
The important thing is always to consult the full amount of the installment. If it is interest-free, try a discount, most stores already include interest in products. Installment payment that results in a very different amount from normal is usually not advantageous as you literally lose money and can turn a snowball on your credit card bill.
Do not get carried away by installments in several very large printings without informing how much interest you are paying. Talk to salespeople, managers and try to get a good discount or interest-free installment. And when shopping online, research long before you close the purchase, you will notice huge price difference from the same product.
If you have any questions or suggestions for us? Leave it in the comments. To the next!