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I'm looking for the correct and everyday usable term for a kind of purchase made with a credit card, which is split up in equal monthly payments, without incurring interest with the credit issuer. I've searched for translations and found some along the lines of - Interest-free - Pay in installments but I'm not sure if those are commonplace, of if there's a more specific and well known term.

NOTE: I come from the English Language & Usage site, where I asked for a translation from its spanish form "meses sin intereses", literally "months without interest"

marmant
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    If I am a consumer group advocate, I will call this "interest-free overspending credit card bait". – mootmoot Jul 04 '19 at 08:12
  • Be aware that it is only zero interest if you follow the terms exactly, and the rules are setup to make it easy to fail. When I was young, I used a loan like this solely to establish credit, I could have paid cash. When a payment was one day late, the entire loan reverted to a huge interest rate (which I then paid of immediately to minimize the damage). – Mattman944 Jul 04 '19 at 14:20

4 Answers4

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0% loan is the first that pops in my mind. There's no one phrase, though, since purchase made with a credit card, which is split up in equal monthly payments, without incurring interest with the credit issuer isn't the point of a credit card.

After all, money costs money and TANSTAAFL (There Ain't No Such Thing As A Free Lunch). You either pay for it with interest, or you pay for it with a higher purchase price, and charging interest is how you pay for money when using a CC.

I'm sure there are exceptions to that rule, but that's what they are: exceptions.

RonJohn
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  • I'm not sure about the loan part. Since you're not getting any money but rather the purchased product or service directly. Regarding the higher purchase price OR paying interest, it is not common for a business to charge you more for an item if you pay by credit card, and the issuer won't charge any interest if you pay the full amount due for the relevant period. – marmant Jul 04 '19 at 02:11
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    @marmant #1 "Since you're not getting any money"... you are being loaned the money to buy the product; it's just hidden. #2 "it is not common for a business to charge you more for an item if you pay by credit card". I made no such assertion; I didn't even hint at it. – RonJohn Jul 04 '19 at 02:15
  • Sorry, I understood that from "You either pay for it with interest, or you pay for it with a higher purchase price, and charging interest is how you pay for money when using a CC." – marmant Jul 04 '19 at 02:18
  • @marmant the store doesn't say, "we're raising the price if you buy with a credit card." No, they silently raise the sticker price and then blare the trumpets NO MONEY DOWN FOR 90 DAYS!!! all over the TV and radio. (Walmart wouldn't do this, but your local furniture store would.) – RonJohn Jul 04 '19 at 02:26
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    This is how credit card issuer makes money: when a large pool of people make use of such a scheme, there are chances that more than 5% of the crowd are overspending and unable to meet their payment, thus, forced to pay the hefty credit card interest fees. – mootmoot Jul 04 '19 at 08:16
  • @mootmoot please show me many examples of CC companies in the US offering 0% APR besides introductory offers and balance transfers (which aren't really 0%, because of the fees involved)? – RonJohn Jul 04 '19 at 14:47
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Sometimes you see it advertised as "No interest financing for Y months", or "0% financing" for y months. This will usually include a requirement that the items total $X of higher. It might only be offered if the TV, appliance or mattress have a price above a minimum price.

So a electronics store may make the offer of $0 financing if the TV is more than $999. Of course the fine print tells you have to apply for the store credit card, and that if the TV isn't paid for within 24 months the rate jumps to 20%, and you owe all the interest that you though you avoided. Sometimes there is a down payment required.

They hope that some people fail to pay for the item in time, and they get back some of the interest. They also hope that once you have the card you will use it for other items.

Sometimes you will even see triple zero financing. In this situation your down payment is $0, your interest is 0%, and no payments for the rest of this year. So they delay that first payment for a few months. When they offer this deal expect the advertisement will have lots of zeros.

xyious
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mhoran_psprep
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I googled interest free credit cards and Google came up with many entries, of which this is one: 0% Intro APR Credit Cards. The article starts out with

These cards offer an outstanding 0% intro APR on purchases, balance transfers, or both. This can help you finally get your hands on that big-ticket item you’ve been eyeing, or manage debt by transferring an existing balance. Our experts have analyzed 1,002 different credit card offers with a 0% introductory APR period and listed the 10 best no interest offers from our partners to suit different spending habits.

The top two credit cards in this particular list are issued by Chase and Capital One and both have an introductory period of 15 months of zero interest on purchases, after which the interest rate rises to the ordinary rates of about 16% to about 26%. 0% introductory APR cards typically offer other inducements, such as 0% interest on balance transfers, cash rewards and so on.

They are useful for large purchases that you can pay off in a year or so. After a year or so, these golden coaches turn into ordinary pumpkins, but by then, the issuer hopes you are hooked on its card.

These cards are variously called interest free credit cards; 0% APR Credit Cards; 0% Credit Cards, and more accurately 0% Intro APR Credit Cards.

ab2
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  • Those are all introductory rates, and that does not match with OP's question, " a kind of purchase made with a credit card, which is split up in equal monthly payments, without incurring interest with the credit issuer." – RonJohn Jul 04 '19 at 02:12
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My first thought (from the UK) would be Interest-free Installment Plan (see this home-furnishings company1, although they also "brand" it "Flexi-pay"). Variants include Interest-free Payment Plan (see this way of paying for accountancy studies or Interest-free Repayment Plan (see this "Sun" article about an offering from NatWest bank).

The terms above are all generic, and I suspect most people (at least in the UK) would understand them2. However, in this age of "brand marketing", many companies are trying to create their own "catchy" name. There is the "Flexi-pay" mentioned above; others – from companies providing pre-packaged installment plans to merchants – include "Slice it." and "Splitit".

1 All links were obtained from web-searches as examples of applicable terms. I am not affiliated with, nor do I endorse, any of these companies.

2 They will certainly understand that they have to pay less per month, and the "free" means they don't appear3 to pay any more for the privilege. Sadly, far too many people overlook that they will still have to pay the full price in the end, and think these plans make things "more affordable" than they really are. They end up buying far too many items at "only £20 per month"... until they miss payments and get hit by interest charges (see below). [Climbs off soap-box... sorry].

3 Of course, as any seasoned PF&M-er knows, and @RonJohn mentions in his answer, there ain't no such thing as a free-lunch. Either the prices are raised to cover the cost of finance, or the penalties for missing payments (e.g. back-dated, high rates of interest) are swingeing. Or both.

TripeHound
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