Financial instituitions seem to be jumping on the BNPL – Buy Now Pay Later bandwagon to allow customers to make purchases and stagger payments over time.
Scotiabank, has taken it a step further to allow it on select credit cards to make purchases as usual and then elect to enrol in their version of BNPL – with the launch of Scotia SelectPay, a new payment solution for eligible Scotiabank Visa credit cards that provides customers with the option to convert purchases made on their credit card into smaller installment payments.
As per their press release, with Scotia SelectPay, Scotiabank customers can shop in person or online and then choose to turn their credit card purchases of $100 or more into 3, 6 or 12-month fixed installment payments, while still earning rewards and insurance coverage on their purchases – with no interest rate on the plan and a low fee.
You qualify for a Scotia SelectPay plan if:
- You are the primary cardholder of an eligible Scotiabank credit card (Co-borrower accounts are currently not eligible for SelectPay)
- Your account is in good standing
- You made an eligible purchase of $100 or more with your eligible Scotiabank credit card
- You have a Scotia OnLine or a mobile banking account
- You’re a resident of a province or territory in Canada other than Quebec
Here is how it works:
Say you purchased an item for $2400, and if you elect to pay it off over 3 months;
You will need to pay it off equally as $800 over the next 3 statements
plus a total fee of 2% of $48 as $16 on each of the 3 statements.
Hence, your payments will be $816 over the next 3 statements.
As you can see there is no interest charged for not making a full payment on the statement, rather a fee of 2% to elect to pay by SelectPay. In this case, the extra amount is $48 on a purchase of $2400.
You can do this on one or more purchases prior to the purchases hitting your statement.
You can also cancel a SelectPay plan at any time, without any cancellation penalties. You won’t be charged the remaining monthly installment fees once the plan has been cancelled. Note that once you cancel an installment plan, the remaining outstanding installment balance under it will be re-applied to the balance owing on your Scotia credit card account and any interest that applies will be charged at the then current annual interest rate that applies to purchases.
Things to keep in mind:
– By opting in for SelectPay, the credit limit will not change as it will have already reduced by the total amount of the purchase when it was made.
However, the monthly installment fee that applies to your installment plan will reduce your available credit each month by the amount of that monthly fee.
– You can use installment plans for purchases of $100 CAD or more (or another amount that Scotiabank may designate from time to time) and only for new eligible purchases that you choose to convert to an installment plan during the same statement period in which it was posted to your eligible account and before your eligible account’s next statement date.A purchase will not be eligible for an installment plan if it has not been enrolled in the same statement period in which it appeared.
– Only purchases are eligible for installment plans. You cannot convert a balance to an installment plan that’s not a purchase, such as a balance transfer or a cash advance.
– There is no maximum purchase amount for which you’re allowed to enroll in an installment plan.
– You can have several active installment plans at the same time and there are no limits to how many installment plans you can have.
– Main point to keep in mind:
If you dont make a payment of your minimum installment payment each month by the payment due date on your statement, your installment plan will automatically be cancelled. The outstanding remaining balance on your installment plan will be re-applied to your regular balance on our account. You will still be required to pay the remaining outstanding balance.
If that happens, the remaining outstanding installment balance under your installment plan will incur interest at the annual interest rate that applies to purchases on your account until it is paid in full.
Which cards are eligible?
All personal Visa credit cards are eligible, however the following personal credit cards are excluded:
- Scotiabank U.S. Dollar VISA card
- No-Fee Scotiabank Value Visa card
- No-Fee ScotiaGold Visa card
- Scotiabank Rewards Visa card
- Scotiabank More Rewards Visa card
- L’earn Visa card
- Scotiabank GM Visa card
- Scotia Momentum Mastercard credit card
- Scotiabank Gold American Express card
- Scotiabank Platinum American Express card
- Scotiabank American Express card and
- Small Business credit cards
And, in case you are wondering, if your Scotiabank credit card earns rewards on purchases, you will earn rewards on the amount of the original purchase that you select to convert to an installment plan, in the same way that you do with any other purchase made on your account (for example, points or cash back).
In conclusion, while we never advocate carrying a balance and always paying off your statement in full, to reap the full benefits of points and miles earned, it is reassuring to know that you have this option available just in case, so you don’t end up paying ridiculously high interest charges by making only the minimum payments.
What are your thoughts on this feature and will you likely be taking advantage of it? Let us know in the comments below.
Written by Dominic Fernandes aka CanadaPointsGuy.
Image courtesy of scotiabank.com.