Recently I have been reading this article "About Huabei installment, the secret you don't know!" "No wonder more and more young people have closed Huabei", which talks about how expensive Alipay Huabei is, how it is a trap, and how it harms young people. Articles have been criticizing Alipay and Huabei, and it seems that only bank credit card installment products are the "right" products. Alipay, Huabei and Jiebei are both "crooked ways".

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But is this really the case? Let’s compare the specific differences between the two.

From the perspective of product definition, Huabei Installment is a consumer financial product launched by Ant Group. Users use Huabei installment payment when making mini program payments. The order is paid in full in real time to the merchant's Alipay account, and the user repays the payment in installments. Credit card installment is a credit card derivative business that is handled by banks for customers who have installment consumption needs and supports scheduled repayment.

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From the perspective of product positioning, Huabei supports online Down channel staging. For users who have opened Alipay Huabei business, users need to make purchases at merchants that support installment payment. Generally, credit card installment only supports online consumption, and offline POS does not support it. There are many types of installment, including cash installment, car installment, bill installment, etc.

From the perspective of target customers, Baihua’s audience is younger, while credit card customers are of all ages.

From the perspective of the rate level, Huabei installment is a two-way charge, that is, the installment fee is borne by both the merchant and the consumer. For example, taking 12 Huabei installments as an example, the installment fees for both merchants and consumers are 7.5%; there are also credit card installment fees, let’s calculate them in detail below.

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Data from the official website of a state-owned bank shows that credit card The handling fee for each issue of the bill is approximately 7.2%, which is approximately equivalent to the annualized interest rate of 13.03%. But is this really the case?

We used the credit card installment actual annualized interest rate calculator to recalculate the actual installment handling fee and found that the nominal annualized interest rate for 12 installments of 10,000 yuan (7.2% handling rate for each installment) was 14.4%, and the actual annualized interest rate was 14.4%. The interest rate is as high as 28.65%. That is, in most cases, banks are fooling users.

If you want to ask why the difference in calculation results is so obvious? In fact, the problem is that everyone ignores the time value of money. Because credit card installments are repaid in installments, and after each installment, the principal is decreasing, but the corresponding handling fees remain unchanged, so the annualized interest rate is ridiculously high.

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So the actual interest rate algorithm for installment business must use the internal rate of return To calculate, the internal rate of return is the discount rate when the total present value of capital inflows is equal to the total present value of capital flows, and the net present value is equal to zero. Specifically, you can use EXCEL or a financial professional calculator to enter the monthly repayment amount and total loan amount to calculate the actual interest rate.

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Trace my credit card and Huabei in stages History: I started using credit cards in 2014 and Huabei in 2016. To sum up the essential differences between the two, there are the following points:

First, we actively use Huabei installment, while credit card installment is marketing.

Second, after Huabei is staged, if we pay it off before the billing date, we will not charge the outstanding billing fee.

If you choose to prepay after the first installment of the bill, you only need to pay back the paid part of the handling fee. However, after the credit card installment, regardless of whether you repay the loan in advance or not, you still need to pay the remaining handling fee (some banks support one more installment), so it is recommended that you ask clearly before the installment.

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Thirdly, Alipay will never actively market users to the platform, but for the sake of performance, banks will contact users to the platform after almost every credit card bill.

Which one do you think is more humane? Do you also think about f’s interest rate related questions and answers: What is the actual interest rate of credit card installment?

The credit card installment interest rate is determined by the card-issuing bank based on a comprehensive assessment of the cardholder’s credit conditions. Generally, the monthly interest rate is around 0.75%, and the converted annual interest rate is 9%. However, the actual interest rate of credit card installment is not so low:

Assume that the credit card installment amount is 10,000 yuan, which is paid off in 12 months, and the interest is charged at 0.75% per installment, then the total installment interest is: 10,000*0.75 %*12=900 yuan.

But in fact, the cardholder only owed the bank 100 million yuan in the first month. With the monthly repayments, the debt became less and less. In the last month, the debt owed was only 833 yuan. , but the monthly interest to be borne is still calculated based on the total borrowed amount, and the actual interest rate is much higher than 9%.