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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: Mark Liddell/Moment/Getty Images July 09, 2021 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Ted Rossman is a senior industry analyst at Bankrate.com. He focuses on the credit card industry and helps consumers maximize rewards, get out of debt and improve their credit scores. Nouri Zarrugh is a writer and editor for CreditCards.com and Bankrate, focusing on product news, guides and reviews. His areas of expertise include credit card strategy, rewards programs, point valuation and credit scores, and his stories on building credit have been cited by Mic.com, LifeHacker, People.com and more. Through his thorough card reviews and product comparisons, Nouri strives to demystify personal finance topics and credit card terms and conditions to help readers save money and protect their credit score. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate logo The Bankrate promise
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The travel rebound continues and card issuers are jockeying for the top positions in consumers’ wallets. Chase recently announced one of the more aggressive promotions: waiving the monthly fee on travel purchases entered into a My Chase Plan between June 30 and Aug. 31. The terms range from three to 18 months. My Chase Plan is the issuer’s version of a buy now, pay later service. Companies such as , Afterpay and offer similar payment plans. Sometimes called “reverse layaway,” they allow a customer to obtain an item now and pay for it over time in predetermined installments. This concept differs from carrying a traditional credit card balance because the term is fixed. Some people prefer the predictability of buy now pay later
Rather than carrying a credit card balance indefinitely, some people like seeing the light at the end of the tunnel. For instance, they know that if they make those three (or six or 12 or 18) monthly payments, they’ll be done, and they know in advance exactly how much they’ll owe. There’s also a potential psychological benefit to viewing a larger purchase in smaller chunks—say, a $1,000 purchase broken into 12 installments of $83 and change, although that way of thinking can encourage overspending. The buy now, pay later industry has been growing rapidly, aided by pandemic-related tailwinds such as an e-commerce boom and a reluctance among many consumers to incur open-ended credit card debt. Bank of America estimates that the buy now, pay later industry . At the high end, that would mean about $1 trillion worth of transactions processed in 2025. Credit card issuers have taken notice, and Chase, Citi and American Express have all rolled out their respective versions of these buy now, pay later installment plans. My Chase Plan, for instance, allows eligible Chase credit cardholders to designate purchases of $100 or more to be paid off in three to 18 monthly installments. Technically, aside from the current travel promotion, these incur a plan fee rather than interest (although one could think of this as a predetermined financing charge akin to interest). The exact terms vary but here s a sample scenario
I recently made a $157.11 non-travel purchase on my card. I could opt into a My Chase Plan with a monthly fee of $0.63 (three payments of $53), $0.69 (six payments of $26.88) or $0.74 (nine payments of $18.20). Again, they don’t technically view these as interest payments, but if they were expressed as annual percentage rates, they would be 4.9 percent, 5.3 percent and 5.7 percent, respectively (far lower than my card’s variable APR of 15.74% – 24.49% variable). What’s really exceptional about Chase’s current promotion is that eligible travel purchases could be interest-free (and plan fee-free) for up to 18 months. Let’s say you spend $1,000 on airline tickets: That would be 18 payments of $55.56. Meanwhile, if you finance that same $1,000 at 16.09 percent () and only make minimum payments, you’ll be in debt for 37 months and will pay about $270 in interest. Even if you commit to paying off the $1,000 in 18 months at 15.74 percent (variable), you’ll owe $132 in interest. Why is Chase doing this
It’s all about market share. If you’re going to make that travel purchase——they want you to make it with one of their cards. They’ll earn an interchange fee from the merchant (often something like 2 percent or 2.5 percent), but more than that, they hope to earn your brand loyalty. Maybe this will be your first experience with My Chase Plan and you’ll like it so much that you’ll use it again in the future (next time with a plan fee). Or maybe this helps keep your Chase credit card near the top of your wallet so you continue to use it regularly, racking up interchange fees for the bank and possibly other fees as well (interest if you carry a balance aside from the promotion, annual fees, foreign transaction fees, late fees, etc.). Does it make sense for you
As long as it’s a purchase you would have made anyway, a 0 percent interest promotion represents free money of sorts. You have to pay it back, of course, but without interest (or a plan fee), you’re able to smooth out your cash flow and use the funds for other things in the meantime. Case in point: I recently bought a car with 63-month interest-free financing. If I take the price of the car ($27,400) and invest it for 63 months, earning 10 percent compounded annually, I’ll end up with about $45,000 at the end of the term. Talk about free money! Of course, this sort of thing could easily go wrong. The market could tank, but a bigger concern in my eyes is overspending. And I suppose I’m right to be concerned since 44 percent of U.S. adults told our sister site CreditCards.com during the second half of 2021. Going back to the travel example, if you’re disciplined, stretching out those trip payments with no interest and no plan fee could free up money for other things. But if you view buy now, pay later as an excuse to splurge, then you’re like the person who “saved” 25 percent at the mall. If you didn’t need to buy that $500 item, you didn’t “save” $125, you spent $375. The bottom line
Executed properly, 0 percent financing is a good way to spread out the impact of a big purchase, but you need to be careful not to let this tactic backfire by overspending or paying late. Have a question about credit cards? E-mail me at and I’d be happy to help. SHARE: Ted Rossman is a senior industry analyst at Bankrate.com. He focuses on the credit card industry and helps consumers maximize rewards, get out of debt and improve their credit scores. Nouri Zarrugh is a writer and editor for CreditCards.com and Bankrate, focusing on product news, guides and reviews. His areas of expertise include credit card strategy, rewards programs, point valuation and credit scores, and his stories on building credit have been cited by Mic.com, LifeHacker, People.com and more. Through his thorough card reviews and product comparisons, Nouri strives to demystify personal finance topics and credit card terms and conditions to help readers save money and protect their credit score. Related Articles