You\u2019re richer than you think but if you\u2019re not, Scotiabank has a hack for that too. They\u2019ve partnered with Visa Canada to become the first Canadian bank to offer their Visa credit cardholders an innovative way to manage cash flow; buy now, pay later.<\/p>\n\n\n\n
According to a survey by the Canadian Payroll Association, almost half of all Canadians are living paychque to paycheque.<\/a> That means one in two people reading this article are living in a financial house of cards \u201cone blow from caving in,\u201d as Katy Perry would sing. Wouldn\u2019t it be great if you could buy what you need right now, and pay it off later? <\/p>\n\n\n\n If the post-pandemic craziness hit you right in the pocketbook, the Scotia SelectPay plan could be the budget-saving solution you\u2019ve been looking for. But what is it, and how does it work? Let\u2019s take a look at the new Buy Now Pay Later (BNPL) plan through Scotia SelectPay, and everything you need to know before opting in.<\/p>\n\n\n\n This past June, Visa Canada announced an innovative feature that gives Canadians a new way to pay. With the new Visa Installments feature, cardholders can break down eligible purchases into smaller, easy-to-manage payments over a specific period of time; interest-free and without a credit check. The only extra fee is the 3% processing fee that is based on the total purchase price. The program is like layaway but in reverse. <\/span><\/p>\n\n\n\n The decision to move into the BNPL ecosystem is driven, in large part, by consumers and merchants alike. The financial impact of the pandemic brought the need for alternative, more flexible payment options to a fever pitch. <\/span><\/p>\n\n\n\n Canadians are demanding better access to goods and services, and businesses need a competitive edge to connect their products and services with even more consumers. The disconnect happens when you can afford to buy the thing you need, you just can\u2019t afford the full cost right this second. The Visa Installment feature steps in to bridge the gap. <\/span><\/p>\n\n\n\n How do they do that? It\u2019s pretty simple actually. In 3 simple steps you:<\/span><\/p>\n\n\n\n You make the payments through your monthly credit card<\/a> statement. I mean, it doesn\u2019t really get much easier than that. But there\u2019s a catch. Just because you have a Visa credit card in your wallet doesn\u2019t mean you can take advantage of their new payment plan feature.<\/span><\/p>\n\n\n\n Right now, this feature is only available to Visa cardholders through participating financial institutions. That means if the bank or credit union that issued your Visa credit card isn\u2019t participating in the program, you\u2019re not invited to the BNPL party. So who got the lucky golden ticket? <\/span><\/p>\n\n\n\n Branded Scotia SelectPay, eligible cardholders have been able to take advantage of the new program since August 2021. If you\u2019re a Scotia Visa credit cardholder, you\u2019re probably chomping at the bit to learn how this whole thing works. So let\u2019s get to it.<\/span><\/p>\n\n\n\n Once you change your credit purchase to an installment plan, it will take up to 3 business days for the change to take effect on your account. By converting your eligible Scotia Visa card purchases into installment plans, you\u2019ll sidestep costly credit card interest charges. <\/span><\/p>\n\n\n\n But you\u2019ll still pay a fee for this service. The fee is calculated as a percentage of your total purchase, then divided by the number of months in your chosen term and included in your monthly installment payment. Here\u2019s an example:<\/span><\/p>\n\n\n\n With your eligible Scotia Visa card, you buy a $1,200 new laptop for college. The processing fee to convert your laptop purchase into an installment plan is 3% of the purchase price. You choose a 6-month term with 6 equal monthly payments. <\/span><\/p>\n\n\n\n $1,200 \/ 6 months = $200 monthly installment payment <\/span><\/p>\n\n\n\n 3% x $1,200 = $36 total fee for 6 months <\/span><\/p>\n\n\n\n $36 \/ 6 = $6 fee per month <\/span><\/p>\n\n\n\n $200 + $6 = $206 total monthly payment with fee <\/span><\/p>\n\n\n\n Your monthly installment payment and a portion of the 3% processing fee will be added to the minimum monthly payment on your credit card statement. You are required to make your total monthly payment on time and in full every month. When you do, a portion of your monthly payment will go to the balance of your regular credit card purchases, and the rest will go to your Scotia SelectPay installment plan. If you miss a payment, your Scotia SelectPay installment plan will be cancelled immediately, the balance will be added back to the regular balance on your credit card account and will be subject to the annualized interest rate outlined in your card agreement. <\/span><\/p>\n\n\n\n So far, the buy now pay later installment plan offered by Visa through Scotiabank is a great way to buy the things you need without breaking the bank. In fact, there are a ton of benefits to converting your eligible credit card purchases into installment plans. Let\u2019s take a closer look: <\/span><\/p>\n\n\n\n 19.99% annual interest on credit card purchases is pretty standard. I\u2019ve seen credit card interest rates as high as 25% on bank-issued credit cards, and private retail cards can be as high as 30%. Wouldn\u2019t you rather keep all of that money instead of paying it in interest?<\/span><\/p>\n\n\n\n By converting big-ticket credit purchases into installment plans, you can dodge those icky interest charges. While this feature isn\u2019t free, the fee associated with it is typically less than the interest you would pay on your regular credit card purchases. Let\u2019s take a peek. <\/span><\/p>\n\n\n\n Circling back to that new laptop, it\u2019s going to cost you $1,200. You don\u2019t have that kind of money right now so you charge it to your credit card. You don\u2019t convert it into an installment plan, and leave it as a regular credit card purchase instead. Your credit card interest rate is 19.99% a year. How much will your $1,200 laptop actually cost you? <\/span><\/p>\n\n\n\n Using the <\/span>Government of Canada<\/span><\/a> credit card payment calculator, your minimum payment on a $1,200 credit card balance is $36 a month. If you only make the minimum payment every month, and not a penny more, it will take you 12 years to pay off your laptop and it will cost you $1,239 in pure interest! <\/span><\/p>\n\n\n\n For many of us, the problem isn\u2019t that we can\u2019t afford the things we need, we just can\u2019t afford the full cost right now. Credit card interest sucks, and it can be prohibitive when it comes to accessing the goods and services you need. <\/span><\/p>\n\n\n\n With the Scotia SelectPay installment plan, you can use your credit card for those eligible big-ticket purchases, or emergency expenses, and choose a payment plan that works with your budget. You\u2019ll have peace of mind knowing you\u2019ll have the balance paid off quickly without costing you an arm, a leg, and your immortal soul in interest charges.\u00a0<\/span><\/p>\n\n\n\n If you\u2019re worried that converting eligible purchases into installment plans will affect your rewards plan, breathe easy. Any eligible purchase that you convert into an installment plan will still earn credit card rewards! So not only do you kick gross interest charges to the curb, you can still rack up those points like the true credit card hack master you are. With the Scotia SelectPay feature, you can have your cake and eat it too. <\/span><\/p>\n\n\n\n Since you have to have a Scotiabank issued Visa credit card to take advantage of the installment plan feature, you were already subject to a credit check in order to qualify for your credit card. You do not need to submit to any new credit checks when you convert your eligible purchases into installment plans. You can take advantage of flexible payment plans without affecting your credit score.<\/a> <\/span><\/p>\n\n\n\n The major downside to the BNPL installment plan is rarely communicated clearly to consumers. Don\u2019t get caught up in the hype of no credit checks. Converting your eligible credit card purchase can still impact your credit score. In order to use the Scotia SelectPay feature for a purchase, you need to have room on your credit card. <\/span><\/p>\n\n\n\n Your purchase is deducted from the available room on your credit card, which increases your credit utilization ratio. 30% of your credit score depends on the amount of available credit you have access to on your credit cards and lines of credit, versus how much you have owing. The more you use, the more it impacts your score. If you\u2019re not careful, you could jack up your credit utilization ratio high enough to start damaging your credit score; kind of defeats the purpose of no credit checks, doesn\u2019t it?<\/span><\/p>\n\n\n\n Think of your total credit card balance like one of those sectioned plates picky toddlers use. All your credit card purchases, both regular and installment plans, are like food on the same plate. But your regular purchases are in one section, and your Scotia SelectPay installment purchases are separated into a different section of the plate where interest can\u2019t touch them and ruin everything.<\/span><\/p>\n\n\n\n If you fail to make your minimum payment in full and on time by the statement due date, your installment plan is immediately cancelled. All those purchases in that nice little interest-free section of the plate get mixed back in with your regular credit card balance and are now subject to credit card interest charges. There is no wiggle room here. One strike, you\u2019re out. <\/span><\/p>\n\n\n\n Unlike your credit card\u2019s minimum monthly payment, your installment plan will have a much higher payment. That\u2019s because the plan is designed to guarantee the balance will be paid off by the end of the term, just like a traditional personal loan. Your regular credit card balance has no such end date. The minimum payment is designed to mostly service the accumulated interest, and very little goes towards the principal balance owing. <\/span><\/p>\n\n\n\n In fact, credit card companies are now legally mandated to disclose how long it will take you to pay off your balance based on the minimum payment. Like I said, your $1,200 laptop would take you 12 years to pay off if all you made was the minimum payment.<\/span><\/p>\n\n\n\n However, you decided to pay it off in 6 months using your Scotia SelectPay feature, the payments have to be higher in order to satisfy the 6-month term. If you miss a payment, it will revert back to a credit card purchase and accrue interest. This feature is only budget-friendly if you can afford the higher monthly payment. <\/span><\/p>\n\n\n\n Interest-free credit card purchases are pretty attractive, I\u2019m not going to lie. If the Scotia SelectPay feature were on Tinder, I would definitely swipe right. But that kind of allure could encourage you to overspend and land you in hot water. You\u2019ll need to exercise caution, restraint, and a lot of discipline. Don\u2019t let the bells and whistles distract you from prioritizing needs over wants. <\/span><\/p>\n\n\n\n If you\u2019re not careful, you could start living beyond your means. By converting too many purchases into installment plans, you could end up stuck with a massive minimum monthly payment that could interfere with your ability to manage your other payment obligations. If something unexpected were to happen, you run the risk of defaulting on your payment and having all those purchases start incurring massive interest charges. Stick to your budget. Buy only what you need when you need it, or you could end up with a lot of expensive bad debt<\/a> on your hands.<\/span><\/p>\n\n\n\n So now that I have sufficiently blown your mind with interest-free credit card payments, you\u2019re probably wondering if you\u2019re eligible to start taking advantage of the Scotia SelectPay feature. If you\u2019re an existing customer or want to become one, most of their personal Visa credit cards offer the buy now pay later feature. Here are a few of our favourites:<\/span><\/p>\n\n\n\n While Scotiabank was the first to offer credit card installment purchases through their Scotia SelectPay feature, they certainly aren\u2019t the only ones. Since their partnership with Visa Canada, there are now several other credit card issuers offering the BNPL option to their cardholders. But Scotia deserves a major shoutout for being the first major Canadian bank to give their customers exactly what they\u2019ve been asking for; creative and flexible payment options. <\/span><\/p>\n\n\n\n As with any financial product, there is always a downside to consider. There is no perfect product or service available under the sun. But as someone who loves credit card points but despises credit card interest, the Scotia SelectPay feels like my financial love language. Proceed with caution, though. If you\u2019re not careful, you could be left dealing with unintended consequences. <\/span><\/p>\n\n\n\n You\u2019re richer than you think but if you\u2019re not, Scotiabank has a hack for that too. They\u2019ve partnered with Visa Canada to become the first Canadian bank to offer their Visa credit cardholders an innovative way to manage cash flow; buy now, pay later. According to a survey by the Canadian Payroll Association, almost half […]<\/p>\n","protected":false},"author":67,"featured_media":45633,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[235,270],"tags":[],"class_list":["post-45632","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","category-buy-now-pay-later"],"acf":{"has_no_offer_box":"0"},"_links":{"self":[{"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/posts\/45632","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/users\/67"}],"replies":[{"embeddable":true,"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/comments?post=45632"}],"version-history":[{"count":0,"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/posts\/45632\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/media\/45633"}],"wp:attachment":[{"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/media?parent=45632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/categories?post=45632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hardbacon.ca\/en\/wp-json\/wp\/v2\/tags?post=45632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Buy now, pay later on your credit card: what is it? <\/span><\/h2>\n\n\n\n
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Buy now pay later with Scotia SelectPay: how does it work? <\/span><\/h2>\n\n\n\n
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Buy now pay later: the benefits<\/span><\/h2>\n\n\n\n
Interest-free credit card purchases<\/span><\/h3>\n\n\n\n
Budget-friendly payment plan<\/span><\/h3>\n\n\n\n
Credit card points and perks <\/span><\/h3>\n\n\n\n
No credit checks<\/span><\/h3>\n\n\n\n
Buy now pay later: the drawbacks<\/span><\/h2>\n\n\n\n
It could still affect your credit score<\/span><\/h3>\n\n\n\n
You could still get charged interest<\/span><\/h3>\n\n\n\n
The monthly payments are high<\/span><\/h3>\n\n\n\n
It could encourage overspending <\/span><\/h3>\n\n\n\n
Buy now pay later: Scotiabank Visa credit cards with Scotia SelectPay<\/span><\/h2>\n\n\n\n
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Final thoughts <\/span><\/h2>\n\n\n\n
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