Installment cards

Installment cards have become increasingly popular recently. People apply for them to pay for a large purchase or make a large purchase when they do not have their own savings or enough money until payday. We will explain what an installment card is, why it is needed, and how it differs from a credit card and a consumer loan.

What an installment card is and why it is needed

Externally, an installment card looks like a regular bank card. On the plastic card you can see:

• the logo of the bank that issued the card;
• payment system logo;
• unique 16-digit number;
• the expiration date;
• the cardholder's last name and first name;
• a contactless payment chip;
• a magnetic stripe;
• security code;
• holder's signature;
• the phone number of the bank that issued the card.

You can use an installment card like a regular credit card — to pay for goods and services in regular stores and online. Some cards also allow you to keep your own funds in the account. To pay for purchases with your own money, you need to top up the installment card above the approved credit limit.

Installment cards work on the same principle as regular credit cards. After the agreement is concluded, an approved limit is set on the card account, within which the borrower can pay for purchases.

The available amount can be increased in the future if you regularly use the card and avoid missed mandatory payments. At the same time, the limit can also be reduced by the bank in case of unfair fulfillment of obligations.

How an installment card differs from a credit card and a consumer loan

An installment plan and a consumer loan are very similar. In both cases, the bank issues the borrower a certain amount, and the client repays it within the agreed term in equal monthly payments. But in the case of an installment plan, the borrower, as a rule, does not need to make a down payment. It also does not provide for overpayment.

The absence of overpayment does not mean that no interest rate is provided for the installment plan. It exists, but the store reduces the price of the goods by the amount of the overpayment. That is, for the buyer it looks like an interest-free loan.

As a result, all parties benefit from such a transaction:

1. The bank receives a commission for transactions.
2. The store attracts new customers with favorable installment terms and the opportunity to buy even expensive goods without overpayment.
3. The buyer saves on the interest rate and can make a large purchase without overpayment.

The main difference between an installment plan and a consumer loan is the repayment procedure. In the first case, the borrower must repay the debt monthly in equal amounts. At the same time, the bank does not charge interest. That is, payments go entirely toward repaying the principal debt.

But for a consumer loan, payment schedules are drawn up so that in the first months most of the amount goes toward paying interest, and at the end of the term — toward repaying the principal amount of the debt.

The main difference between an installment card and a regular credit card is the length of the interest-free period. This is the period during which the borrower can use borrowed funds and not pay an interest rate for it. For credit cards, the grace period, as a rule, is from 50 to 200 days. For installment cards, the grace period is longer. It can be from 2 to 24 months depending on the terms of a particular bank and partner store. But keep in mind that some credit institutions charge an additional commission for arranging an interest-free loan.

When it is better to apply for an installment card rather than a credit card

An installment card and a credit card are convenient banking products. Both are needed to pay for purchases and services when you do not have your own money. But for everyday tasks, a regular credit card is better suited.

And applying for an installment card is justified in the following cases:

• when you need to make a large purchase, but cannot wait until the required amount is saved from your salary;
• if a person does not want to pay high interest to the bank;
• if a person wants to buy goods on credit for a long term — from 6 months, but cannot make large monthly payments;
• if the borrower wants to improve their credit history without taking out a large consumer loan;
• if the borrower already has a credit card, but its grace period is not enough to make a large purchase without damaging the budget.

When deciding whether to apply for a credit card or an installment card, you should carefully analyze all possible expenses to determine the most advantageous option.

What to pay attention to when choosing an installment card

An installment card is a credit product, so it should be used with caution. Here are several points to pay attention to when applying for and using the card:

1. Duration of the installment plan. It can be from 2 to 24 months depending on the terms of a particular bank or store. For example, at T-Bank you can arrange a purchase in installments for a term of 2, 4, 6, 9, or 12 months.
2. Usage restrictions. Some cards can only be used in certain stores participating in the credit institution's partner program. Before using the card, we recommend reviewing the list of these retail chains.
3. Discounts and promotions. When paying with the card, discounts on goods may not be available. In this case, an interest-free loan may turn out to be unprofitable. Sometimes it will be better to buy the product on sale for cash.
4. Spontaneous purchases. Many people with an installment card make impulsive and unnecessary purchases that they would not pay for with cash. This increases the debt burden and creates the risk of falling into a debt trap. Therefore, it is important to soberly assess your needs and capabilities when using such cards.
5. Timeliness of payments. Monthly payments must be made on time. If the terms of the agreement are violated, the bank charges a penalty and reports the debt to the Credit History Bureau. Even a small overdue payment can ruin the borrower's credit history.

Who can get an installment card and what is required for it

Getting an installment card is easier than obtaining a consumer loan — banks impose less strict requirements on borrowers, as the risk of debt default on such a card is significantly lower.

Usually, Russian citizens with permanent or temporary registration in the country can apply for a card. The borrower must be over 18 and under 65 years old, have a work experience of at least three months at their last job and a total work experience of at least one year.

Requirements for the borrower may vary depending on the bank, so before submitting an application, we recommend reviewing the criteria that must be met. Otherwise, your application may be rejected.

A Russian internal passport is usually sufficient to apply for a credit card. However, when applying to a bank for the first time, lacking a credit history, or requesting a large loan amount, the lender may ask for additional documents. For example, income and employment verification certificates.

Getting an installment card in 2024 is very simple. Most financial institutions provide the opportunity to do this online: on the official website or in the mobile application if the person is already a bank customer.

To submit an online card application, you need to do the following:

1. Go to the card application page and click the "Get Card" button.
2. Fill out a short application form indicating the desired credit limit, your personal data (last name, first name, and patronymic), passport details, registration address and residential address, as well as information about employment, income, and marital status.
3. Choose the card delivery method, date, time, and meeting place with a representative if it is to be delivered by a courier to your home.
4. Wait for the bank's decision and sign the credit agreement.

If the borrower cannot apply online, they can visit a branch of the lending institution. To do this, you need to find the nearest office and visit it during working hours, bringing all necessary documents with you (we recommend clarifying the list of documents in advance).