The Credit cards They are one of the most used elements to finance expenses in times of inflation. The key is to know whether or not it is convenient to make the payment in fixed installments Or is it better to use interest-free installments? But of course, everything depends on the value of the final price.
Credit cards: what is the difference between fixed installments and interest-free installments
The fixed installments or with interest are those that start from the amount that is pay per month and to which a proportional value is added due to the financing plan. The interest-free fees They have the same value every month, that is, the total amount for the purchase is divided into equal parts, according to the agreed months.
In the fixed installmentsThe important thing is the Total Financial Cost (CFT) because everything that is quoted may seem cheap but has high rates.
The Total Financial Cost (CFT) is the total value of a loan. It is made up of the interest rate and also different expenses linked to the granting and management of the loan or credit.
Credit cards: what happens with Now 3,6,12,18 and 24 in fixed installments
Although consumers associate “Now” programs with interest-free installments, the truth is that these programs currently have an interest rate. The important thing here is not only to see the CFT, but also how much you can have in the final value of the product and whether or not it is convenient to pay more for that financing period.
What happens is that with the “Now” program the rate is very low, cheaper than those offered in private banks, which ends up being convenient in the long term. In that case, dividing the amount into several payments is convenient for the consumer, who must also calculate whether their future income will be enough to cover the total credit card statement.
The warning: pay now in installments and the minimum is more expensive
The rise in inflation, which is already close to 140% year-on-year, has an impact both on the rise in the interest rate for installment purchases as in the cost of refinancing of balances. In this context, starting in November the cost of credit card financing and pay the minimum It will have a very high cost.
The decision was regulated in the Official bulletin in Communication “A” 7862/2023, following double-digit inflation for the second consecutive month, 12.4% in August and 12.7% in September. Credit card refinancing will increase from 107% to 122% nominal annual rate (TNA), a percentage that applies to amounts less than $200,000 or $200. However, The Total Financial Cost (CFT), which will finally appear in the summary, will be around 302.8% approximately.
Pay the minimumrequest a cash advance or pay in installments outside the program Now 12 It will involve managing these numbers in the budget. For this last payment plan, the logic of short-term financing is extended, since Now 3 continues to be the most chosen option.
The consumer trend
According to the report “Payway Index”, Almost 60% of purchases registered with credit cards are made in a single payment.
As the study indicates, 58.37% of consumption recorded through credit cards in the third trimester of 2023 was made in a single installment. It follows as Second most chosen option, financing in 2 or 3 installments, although outside the Now 12 plan, with 51.89% in terms of consumption composition. Then, there are plans with 4 to 6 installments, with a representation of 33.65%, and plans with 7 to 12 installments, with 11.02%.
According to Julián Ballarino, Head of Institutional Relations, “credit card purchases in one payment are gaining ground in the total volume compared to the previous quarter” since “preference for short financing plans grows with credit card.”