Credit card instalment loans are your besties when it comes to big purchases. No idea what instalment loans are? MoneySmart is here to guide you step by step. We have compared instalment loans from different banks, such as DBS, Hang Seng, and Standard Chartered to help you make your final decision.
Before we go into the comparison, here’re a few things you should know before getting a loan:
If you’re thinking to get a credit card instalment loan, you should call and apply to your card issuer 2 to 10 days before the payment due date of your bill. Generally, you’ll get an instalment loan that is up to 60 months, which charges you a monthly or a one-off interest fee. But as for how much interest they charge you, it depends on your credit card, credit limit, and transaction amount.
Check the handling fee before applying
Shopping is surely enjoyable but it’s not so when the bills come. That’s why you should take a closer look at your credit cards’ instalment loans. Ask yourself: Which credit card gives you the lowest handling fees?
Don’t know the answer? No worries, simply call your card issuer and ask for their offers. Let’s look at these six local banks and how they charge you differently:
Limits on HSBC & Dah Sing’s loans
If you’re a fan of one-off interest fee, DBS is the best choice for you. But if you’re looking for plans with monthly interest fees, HSBC offers you the best deal of 0.18%. However, its spending requirement is relatively high at HK$50,000 or above. If your transaction amount is less than HK$50,000, HSBC is going to charge you at least 0.2%.
Not everyone spends that much, though. That’s why Standard Chartered and Dah Sing are the second best options. Note that Dah Sing has a limit — they charge you 0.24% if your transaction is less than HK$10,000.
But wait, does that mean that Standard Chartered is better? Not necessarily so. Once, one of our colleagues applied for an HK$8,000 instalment loan at Standard Chartered and was charged a 0.4% monthly handling fee. Terrible rate, right?
Recommendation: HSBC Visa Signature Card
How can we miss Red Hot Rewards of Your Choice when it comes to HSBC credit cards? Simply put the extra 5X RewardCash and the extra 3X RewardCash of this card to a certain spending category and you can earn up to 3.6% cash rebates or HK$2.78/mile with no minimum spend.
DBS offers the lowest handling fee
Since every bank charges differently, we’ve done the math for you to show you which is the best deal.
Let’s assume our transaction amount is HK$10,000. If you want to split it up into 6 months, the handling fees for Standard Chartered and Dah Sing will be $10,000 X 0.19% X 6 = $114 for the 6-month interest fee. As you can see, DBS’s handling fee is still lower than Standard Chartered and Dah Sing even though it has an HK$100 handling fee, which increases with the transaction amount.
Recommendation: DBS Black World MasterCard
DBS Black World MasterCard offers you HK$4/mile for overseas spending all-year-around. Plus, you can redeem air miles such as Asia Miles, Avios, KrisFlyer and Phoenix Miles for free with the never-expire points. This card gives you discounts at Expedia, Agoda, Zuji, and Hotels.com, and you get a free newspaper/magazine at RELAY in HK Airport Restricted Area by showing your card and boarding pass.
One-off interest fee increases your loan
The one-off interest fees of DBS and Hang Seng increase with your transaction amount and repayment period. For a transaction under HK$5,000 that’s split into 6 months, you get the lowest interest fees of HK$50 and HK$70 (as stated above). But they charge you HK$150 and HK$200 respectively if you’re getting an HK$15,000 6-month instalment loan.
If you’re getting those one-off plans, the banks will deduct the handling fee from your account in the first phrase of repayment. After that, you’ll only need to repay the principal. The best thing about these plans is that they charge everyone the same amount as is clearly stated in the forms. With that chart, you can plan your budget before the application.
Recommendation: Hang Seng enJoy Card
Hang Seng enJoy Card targets at daily spending. This card offers you $2 enJoy Dollars for every HK$200 spending at 7-Eleven, Mannings, Welcome, Maxim’s Group, Starbucks, The Excelsior, and other designated merchants, and $1 Cash Dollars for every HK$200 spending at other stores. The biggest perk of this card is that you can use enJoy Dollars and Cash Dollar together at those designated merchants. Saving you thousands of money if you’re a fan of their partners.
Best rate comes at a price
Monthly handling fees might be a better choice for some people. But do note that the lowest spending amount doesn’t guarantee you the lowest handling fee. Different banks have their own spending limit. Make sure you’ve asked your bank if there are any hidden fees before applying.