The installment free of charge is very rare, which is not the routine business of banks, but usually a preferential activity launched by some banks or cooperative shopping malls, and more often it is nominally free of charge, but the actual total amount will be greater than the commodity price.
credit card installment refers to the process that when a cardholder uses a credit card to make a large amount of consumption, the bank pays the consumer funds of the goods (or services) purchased by the cardholder to the merchant in one lump sum, and then the cardholder repays the money to the bank in installments and pays the handling fee.
according to the cardholder's application, the bank will deduct the consumption funds and handling fees by stages through the cardholder's credit card account, and the cardholder will repay them according to the monthly recorded amount.
handling fee
In the early days of credit card installment payment, banks often advertised under the banner of "interest-free", and indeed many citizens were "fooled". In fact, interest-free is not free, just a different name.
generally speaking, the handling fee for general credit card installment payment for one year is lower than the annual cash withdrawal interest of 18% and higher than the bank's one-year commercial loan interest of 5.31%. It is worth mentioning that the loan interest rate of commercial banks has been lowered many times in recent years, but the standard of credit card installment fee and cash withdrawal interest has rarely changed. Although the standards of credit card installment fees in different banks are different, the calculation methods are roughly the same.
suppose the installment amount is 12 yuan, divided into 12 installments, and 1 yuan will be repaid in each installment (month). The handling fee is .6%/ month, and the actual monthly deduction is 1+12×.6%=17.2 yuan. If other factors are not considered, the convertible nominal annual interest rate is 7.2%. However, the cardholder does not always owe the bank 1,2 yuan. In the last month, he actually owes the bank 1 yuan, but the bank still charges a handling fee of 1,2 yuan.
according to the calculation, the real annual interest rate that the cardholder has to pay is about 15.48%. According to the correct calculation formula, it should be 12 * .6% * (1+.6%) 12/((1+.6%) 12-1) = 13.94 yuan, with an extra handling fee of 3.2% per period.
The main benefits of credit card installment:
Enjoy first, then pay.
no guarantor, simple procedure.
fixed time and easy payment.
Free monthly repayment amount for payment
More space for choosing payment methods.
Business type:
From the form of installment payment, the starting amount of a single transaction is limited for cardholders to handle this business, and the level of installment repayment and the standard of handling fee are also different; It can be roughly divided into three categories:
The first category is the cooperation between banks and special merchants, but the product categories are limited;
the second category is the product catalogue provided by the bank, which is selected by the cardholder, and then the bank entrusts the supplier to deliver the goods to the customer;
The third category is not limited to merchants and commodities. Cardholders only need to apply to the bank for installment repayment after shopping. Some banks even set the acceptance scope as global.