1

I'm not from the USA but I have a question since I'm going to be there soon.

Where I'm from you can split credit card repayment to spread them over few months. For example if I bought something worth $1000 I can pay $250 every month.

Do they have this in America? I cant find any info about this. If it does exist, what is it called?

  • You can pay the whole amount ($1000 in your case) to the seller, and pay the credit card company back $250+interest per month for 4 months. – Dylan Czenski Apr 3 '17 at 3:11
  • 1
    Please clarify whether you mean paying $250 per month to the person you're buying from, or paying $1000 all at once to the seller via your card, and then paying $250 per month to the credit card company. The former is described by alexandroid's answer and is not widely available in the US. The latter is easily doable --- all too easily, as you will accrue interest on the unpaid portion and thus wind up having to pay more than the original $1000. – BrenBarn Apr 3 '17 at 5:03
3

In the U.S., when you receive your credit card bill each month there's a "minimum payment amount." That minimum payment is usually the greater of $25 or 1% of the new balance on the card plus new interest and fees.

As long as you pay the minimum payment amount, you can pay as much as you want each month.

Note, in your example, you would be required to pay more than $1000 to pay off the balance, as interest would accrue each month on the unpaid principal. How much more is dependent on the interest rate of the card.

2

It is called "Credit card installments" or "Equal pay installments", and I am not aware of them being widely used in the USA. While in other countries they are supported by banks directly (right?), in US you may find this option only in some big stores like home improvement stores, car dealerships, cell phone operators (so that you can buy a new phone) etc. Some stores allow 0% financing for, say, 12 months which is not exactly the same as installments but close, if you have discipline to pay $250 each month and not wait for 12 months to end.

Splitting the big payment in parts means that the seller gets money in parts as well, and it adds risks of customer default, introduces debt collection possibility etc. That's why it's usually up to the merchants to support it - bank does not care in this case, from the bank point of view the store just charges the same card another $250 every month.

In other countries banks support this option directly, I think, taking over or dividing the risk with the merchants. This has not happened in US.

There is a company SplitIt which automates installments if stores want to support it but again, it means stores need to agree to it.

Here is a simple article describing how credit cards work: https://www.usbank.com/credit-cards/how-credit-cards-work.html

In general, if you move to US, you are unlikely to be able to get a regular credit card because you will not have any "credit history" which is a system designed to track each customer ability to get & pay off debt. The easiest way to build the history - request "secured credit card", which means you have to give the bank money up front and then they will give you a credit card with a credit limit equal to that amount. It's like a "practice credit card". You use it for 6-12 months and the bank will report your usage to credit bureaus, establishing your "credit score". After that you should be able to get your money back and convert your secured card into a regular credit card. Credit history can be also built by paying rent and utilities but that requires companies who collect money to report the payments to credit bureaus and very few do that. As anything else in US, there are some businesses which help to solve this problem for extra money.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .