31-10-2010, 09:00 AM
My personal view - I hate paying by installments, even if they are interest-free. I'd rather just pay it off all at once if I can afford it. If it's too expensive, then I probably am going for something I want, but don't need! 
Oct 31, 2010
More opting to buy now, pay later
More people using 0% instalment payment plans offered by banks and retailers, but paying over long stretch can take its toll
By Ng Kai Ling and Kon Xin Hua
Want that latest designer bag but can't cough up $2,000 upfront? Buy now, pay later: That is what more people are opting to do these days.
From spectacles and spa treatments to laptops and lounge chairs, almost anything priced above $500 can be bought and paid for in instalments, using the zero per cent instalment payment plans (IPPs) offered to credit card holders.
Just last month, Madam Ivy Chua, co-owner of A* Bags & Jewellery Collections in Thomson Plaza, sold three designer bags totalling $7,000 to a regular customer who used the IPP offered by DBS Bank to pay for her purchases.
'With instalments, some customers are willing to spend more at one go because they don't have to pay the bank a lump sum,' said Madam Chua, who started offering the instalment plan last year, in Mandarin. Her shop sells second-hand designer bags and also new ones bought directly from boutiques overseas.
All three local banks - DBS, United Overseas Bank (UOB) and OCBC Bank - say more cardholders are using their zero per cent IPPs when making purchases.
While they declined to give the numbers of such transactions, Ms Gan Ai Im, UOB's head of cards and payment products for the region and Singapore, said there has been a gradual year-on-year increase in payments by instalment, and growth in the past year was in the double digits.
As of August, there were about 6.2 million credit cards held by individuals in Singapore.
The three banks started IPP services about 10 years ago as another payment option for their cardholders.
When a customer uses the service, his bank will pay the full amount of his purchase to the merchant but bill him in instalments of six, 12 or 24 months.
One reason for the growth of this usage is that it can be used at different retailers offering a variety of products and services, including spas and shops selling high-end watches, spectacles and jewellery, as well as online shops.
To qualify for IPP, cardholders need to spend a minimum of $500 on a single purchase.
Banks have gone out to court retailers to get on board. OCBC now has 1,730 participating outlets, DBS has more than 1,000, and UOB has the widest coverage with 3,500.
They range from curtain shops in the heartland to high-end watch boutiques like Cortina.
Retailers like spas and jewellers also have tie-ups with multiple banks.
Aspial-Lee Hwa Jewellery's business director, Mr Kean Ng, said customers can use such instalment plans at its 32 boutiques with credit cards from seven different banks.
'We took up IPP with the banks to offer our customers, who may want to spread their spending over a longer period, another payment option. IPP contributes about 10 per cent of our overall sales,' he said.
The percentage of transactions made using these credit card instalment plans ranged from 5 per cent in heartland shops selling watches and spectacles, to up to 80 per cent, mostly at spas.
Before the instalment payment plans were offered, few businesses allowed customers to take home their purchases before paying the full amount.
One of them is furniture giant Courts, which has both in-house payment plans and tie-ups with banks.
It started its own hire purchase schemes as early as 1974. About 25 per cent of its customers use one of these plans.
Others, like goldsmiths in Little India, allow customers to take home their purchases after making the full payment over three months.
'Customers use hire purchase to lock in the price of the item, instead of saving up over three months. By then, the price may have gone up,' said Mr S.P. Ramu, director of Ani Mani Goldsmiths and Silver Jewellers in Serangoon Road, who started offering hire purchase plans more than 10 years ago.
Most, if not all, goldsmiths in Little India also offer similar schemes.
But while these instalment plans help to spread out one's financial burden, having to service instalments for a long period can still take its toll.
Operations manager Julian Poh bought a laptop, a television and a washing machine for a total of about $5,000 at the end of 2007 using his credit card's interest-free plan.
Even though this means he has to pay only about $350 a month over 24 months, the full $5,000 was deducted from his credit card limit.
'At that time, it felt less painful because I thought paying by instalment was more manageable. But it dragged on for too long and my credit limit was greatly reduced,' he said.
kailing@sph.com.sg
xhkon@sph.com.sg
--------------------------------------------------------------------------------
Credit limit cut
'At that time, it felt less painful because I thought paying by instalment was more manageable. But it dragged on for too long and my credit limit was greatly reduced.'
Operations manager Julian Poh, who bought goods costing about $5,000 in 2007 using an interest-free plan with instalments over 24 months. The full $5,000 was deducted from his credit card limit
Oct 31, 2010
More opting to buy now, pay later
More people using 0% instalment payment plans offered by banks and retailers, but paying over long stretch can take its toll
By Ng Kai Ling and Kon Xin Hua
Want that latest designer bag but can't cough up $2,000 upfront? Buy now, pay later: That is what more people are opting to do these days.
From spectacles and spa treatments to laptops and lounge chairs, almost anything priced above $500 can be bought and paid for in instalments, using the zero per cent instalment payment plans (IPPs) offered to credit card holders.
Just last month, Madam Ivy Chua, co-owner of A* Bags & Jewellery Collections in Thomson Plaza, sold three designer bags totalling $7,000 to a regular customer who used the IPP offered by DBS Bank to pay for her purchases.
'With instalments, some customers are willing to spend more at one go because they don't have to pay the bank a lump sum,' said Madam Chua, who started offering the instalment plan last year, in Mandarin. Her shop sells second-hand designer bags and also new ones bought directly from boutiques overseas.
All three local banks - DBS, United Overseas Bank (UOB) and OCBC Bank - say more cardholders are using their zero per cent IPPs when making purchases.
While they declined to give the numbers of such transactions, Ms Gan Ai Im, UOB's head of cards and payment products for the region and Singapore, said there has been a gradual year-on-year increase in payments by instalment, and growth in the past year was in the double digits.
As of August, there were about 6.2 million credit cards held by individuals in Singapore.
The three banks started IPP services about 10 years ago as another payment option for their cardholders.
When a customer uses the service, his bank will pay the full amount of his purchase to the merchant but bill him in instalments of six, 12 or 24 months.
One reason for the growth of this usage is that it can be used at different retailers offering a variety of products and services, including spas and shops selling high-end watches, spectacles and jewellery, as well as online shops.
To qualify for IPP, cardholders need to spend a minimum of $500 on a single purchase.
Banks have gone out to court retailers to get on board. OCBC now has 1,730 participating outlets, DBS has more than 1,000, and UOB has the widest coverage with 3,500.
They range from curtain shops in the heartland to high-end watch boutiques like Cortina.
Retailers like spas and jewellers also have tie-ups with multiple banks.
Aspial-Lee Hwa Jewellery's business director, Mr Kean Ng, said customers can use such instalment plans at its 32 boutiques with credit cards from seven different banks.
'We took up IPP with the banks to offer our customers, who may want to spread their spending over a longer period, another payment option. IPP contributes about 10 per cent of our overall sales,' he said.
The percentage of transactions made using these credit card instalment plans ranged from 5 per cent in heartland shops selling watches and spectacles, to up to 80 per cent, mostly at spas.
Before the instalment payment plans were offered, few businesses allowed customers to take home their purchases before paying the full amount.
One of them is furniture giant Courts, which has both in-house payment plans and tie-ups with banks.
It started its own hire purchase schemes as early as 1974. About 25 per cent of its customers use one of these plans.
Others, like goldsmiths in Little India, allow customers to take home their purchases after making the full payment over three months.
'Customers use hire purchase to lock in the price of the item, instead of saving up over three months. By then, the price may have gone up,' said Mr S.P. Ramu, director of Ani Mani Goldsmiths and Silver Jewellers in Serangoon Road, who started offering hire purchase plans more than 10 years ago.
Most, if not all, goldsmiths in Little India also offer similar schemes.
But while these instalment plans help to spread out one's financial burden, having to service instalments for a long period can still take its toll.
Operations manager Julian Poh bought a laptop, a television and a washing machine for a total of about $5,000 at the end of 2007 using his credit card's interest-free plan.
Even though this means he has to pay only about $350 a month over 24 months, the full $5,000 was deducted from his credit card limit.
'At that time, it felt less painful because I thought paying by instalment was more manageable. But it dragged on for too long and my credit limit was greatly reduced,' he said.
kailing@sph.com.sg
xhkon@sph.com.sg
--------------------------------------------------------------------------------
Credit limit cut
'At that time, it felt less painful because I thought paying by instalment was more manageable. But it dragged on for too long and my credit limit was greatly reduced.'
Operations manager Julian Poh, who bought goods costing about $5,000 in 2007 using an interest-free plan with instalments over 24 months. The full $5,000 was deducted from his credit card limit
