Cardholders can now spread the cost of eligible purchases over up to 12 monthly instalments at a much lower interest rate.
Revolut has launched a nifty new feature on its credit card that allows you to pay for an item over several instalments at an interest rate more akin to a personal loan.
It comes at a time when Revolut is continuing to expand its range of services in Ireland with a launch into the mortgage market expected later this year.
Revolut's new instalment plan feature
Revolut’s credit card currently charges an annual percentage rate (APR) of 17.99%.
Now, under its new instalment plan feature, you can buy something with your credit card and choose to put the purchase onto an 'instalment plan' and pay it back over three, six, nine, or 12 equal monthly intervals or instalments. And you’ll be charged a much lower interest rate of just 9.50% (9.98% APR) on these purchases.
There aren’t any additional fees for using the feature and you can create an instalment plan for a purchase quickly within the Revolut app with just a few taps and cancel the plan at any time without any extra fees if you wish.
Multiple purchases can also be consolidated into the one instalment plan.
However you can only place a purchase that’s over €50 onto an instalment plan. The feature isn’t meant for smaller purchases.
There’s no limit to how many ‘instalments' you can have on your credit card at once. But your instalment(s) can’t exceed 80% of your credit card limit. So if your credit limit is €2,000, the maximum amount you could have on instalments at any one time is €1,600.
The feature will be available to Revolut's new and existing credit card holders and is aimed at customers who may otherwise have considered ‘pay later’ finance options or a personal loan.
Not the first...
Revolut anticipates its new feature will help 'shake up the Irish lending market', whilst changing the way that Irish consumers utilise credit and manage their finances.
However an instalment plan feature on credit cards is by no means a first for the Irish market.
KBC offered a feature like this before it exited the market a few years ago and Bank of Ireland currently offers this feature on most of its credit cards too at an even lower rate of just 6.90% APR. And you can spread your payments over up to 24 months.
But what sets Revolut apart, as always, is how easy it makes using the feature.
With Bank of Ireland you have to complete an online instalment plan request form or call the bank to ask that a purchase be placed on an instalment plan. Though you can also set up an instalment plan at the point of sale in certain retailers in some instances. But with Revolut it can all be done easily and seamlessly within the app at the touch of a few buttons.
What we’re doing here is simplifying credit card repayments in a way that many of the other Irish banks can’t. Our mission is to help consumers take control of their finances and this new feature allows our customers to do just that — to repay their credit card ‘Instalments’ plans in a structured way at a more affordable annual percentage rate of just 9.98%.
Rob Mooney, Heading of Lending - Ireland at Revolut
A word of caution
While this new feature from Revolut could help consumers save money by availing of a better interest rate, which is obviously a good thing, it could also lead to frivolous spending if people don’t monitor carefully what they're spending.
If you have a credit card you should always try to pay off your balance in full and on time each month to avoid paying interest. With most credit cards you get up to 56 days’ interest-free credit.
You should really only use an instalment plan feature for larger and important purchases that may previously have required a small personal loan, not day-to-day spending.
And if you can’t pay off your balance in full, pay off as much as possible. Don’t be tempted to use your bank’s minimum repayment amount which can be as low as 3% of the balance in some cases as you'll end up paying way more in interest.
