Buy Now, Pay Later plans (BNPL) and Scotia SelectPay Installment plans

Learn how installment plans on credit cards, like those available from Scotiabank through its SelectPay^TM plans – can help to provide a flexible way to pay for planned and unplanned purchases (during checkout or after purchase).

You may have seen terms like installment plans (sometimes referred to as buy now, pay later loans (BNPL) appear in your online search recently. You’ll likely see these terms used often, lately in online promotional materials, at checkout counters when you are making purchases, and with your online purchases.

According to a 2022 study, installment plans on credit cards and buy now, pay later loans (BNPL) are becoming increasingly popular. About one in seven Canadians have used them, and more than one in four express interest in using either payment method in the future.⁶

Scotia’s credit card installment plans are different from BNPLs that may be offered by other providers in that they’re not separate loans, and you don't have to apply for an installment plan under Scotia’s SelectPay. The SelectPay feature is available on eligible Scotiabank Visa* credit cards.

Keep reading to learn more about Scotia SelectPay, how it works and if it may be the right choice for you.

With Scotia SelectPay, the installment plan payment option is a feature included on your existing credit card, so you don’t need to do an additional application or credit check to take part, and they are available - both during checkout and after purchase – when you use your eligible Scotiabank Visa credit card to make the purchase. Note that not all Scotiabank credit cards include the installment plan feature but if they do, you may wish to consider one for your next purchase.  

There are different providers who offer installment plans, including banks, merchants, and retail companies – sometimes those plans are included on a credit card or sometimes these payment methods are separate and referred to as “buy now, pay later” loans (BNPL).  

Check what type of installment plan is offered on your credit card or by a provider you deal with as they may require a separate credit check or even an application. That is not the case with SelectPay installment plans from Scotiabank that are features of eligible Visa credit cards. 

With a Scotia SelectPay installment plan, you can convert eligible purchases made on your eligible Scotiabank credit card of $100 or more² into monthly installment payments over a fixed period of time³ during checkout or after purchase. Plus, you'll pay a low installment interest rate on the plan (compared to the regular credit card interest rate that applies to purchases on your credit card). 

SelectPay currently offers 3-, 6- or 12-month periods on installment plans⁴, allowing you to divide an eligible purchase into smaller amounts. This could be used to help you manage your debt for purchases you need to make.

Compared to other BNPL solutions, in particular those you may be offered from retailers, the Scotia SelectPay feature is included with your eligible Scotiabank credit card.  Other retailers may offer BNPL solutions as separate loans which means you have to apply for them and a credit check is required. 

With Scotia SelectPay, you can now choose to set up an installment plan at participating merchants during checkout - when you shop online or in-store or after the eligible purchase is posted to your Scotiabank credit card account, you can convert it through the Scotia mobile app or Scotia online banking. 

As mentioned above, Scotia SelectPay installment plan offers some useful features, take a look at below:

You can learn more about all of these features on the Scotia SelectPay product page.

Let’s look at an example of when you might need to use an installment plan.

If you rely on your laptop for work or school and one day it just stops working, you don’t have much of a choice but to replace it. Unless you have the cash on hand, you’ll have to find a way to finance the purchase. Rather than charging the purchase to your credit card and trying to pay it off in full at the end of the first statement period (the end of that month when you purchased it), with a Scotia SelectPay plan, you can choose to convert that purchase into an installment plan. Perhaps, a 3-month period installment plan with a low interest rate of 5.99%.

Let’s say you bought a $1,200 laptop and converted it into a 3-month Scotia SelectPay installment plan with a low installment interest rate of 5.99% and no installment plan fee.

Your payments and interest for your Scotia SelectPay plan would be as follows:⁴

There are certain situations, like the example above, when using a credit card installment plan can make sense. However, there are also scenarios where you may want to hold off and try to find another option. When considering if an installment plan for your credit card purchase is the right choice for you, you can ask yourself some of the questions listed below.

Before using your credit card to make a purchase, ask yourself: Can I pay for this now? Or is it possible to budget for the item, save up and buy it outright? If you have the money to purchase the item outright, this may be the best option. However, if you need to make a large or unexpected purchase in the short term, you can consider using an installment plan to help make the purchase without blowing your monthly budget.

If you have the cash to pay for your purchase in full in the first month you make, then using an installment plan may not save you money on interest. You should have an interest-free grace period on purchases you make that first month if you can pay your balance on your credit card in full that month.

However, putting a purchase on an installment plan can help you manage your budget and you can use your extra cashflow to manage your finances. Plus, if the alternative is carrying a large balance on your credit card and paying interest at the regular interest rate that applies to purchases until you pay it off in full, then it might make more sense to use an installment plan. As with every financial decision, you'll need to crunch some numbers including the amount of the installment plan fee for the plan. 

Before using an installment plan on your credit card, consider if you have a plan in place to repay your installments on time and in full. 

If you miss an installment payment, the provider of that installment plan may charge you interest on the overdue payment so you may incur more interest charges on the unpaid balance (again, those will depend on the provider of the service) or your plan could be cancelled.

In the case of Scotia SelectPay, for example, if you miss a payment, currently your installment plan will be automatically cancelled, and the outstanding balance on your plan will be re-applied to your regular credit card balance. At this point, the re-applied balance will incur interest at the annual interest rate on purchases that applies to your Scotiabank credit card.  

So, evaluating if an installment plan is the right option for your financial situation is always a good thing to do.

Another question that may come to mind when thinking about an installment option is how it may impact your credit score. It's a good question to ask, as making the right financial moves can help your credit score.

The good news is that converting an eligible purchase into a Scotia SelectPay plan won't affect your credit score by doing so.

Since you've already been approved for your eligible Scotiabank credit card, there's no need to go through another round of credit checks or approvals only for an installment plan through Scotia SelectPay. Your plan can be for the amount up to your available credit.

But remember that missing a Scotia SelectPay installment plan any month -- or any credit card payment for that matter with us -- could negatively impact your credit score.  Remember to always make sure that Scotiabank receives at least your minimum payments on time each month.

Once you've evaluated your financial situation and decided if an installment plan is the right move for you, you may be wondering “how do I use it?" 

With Scotia SelectPay, it’s an easy process (see below).

During Checkout Plans: During checkout, either online or in-store, follow these five simple steps to make your purchase with Scotia SelectPay credit card installment plan during checkout:

1. Use your eligible Scotiabank credit card to pay for your purchase – as you would typically do - during checkout.
2. If you want to convert your eligible purchase into fixed monthly installment payments, select "Installments."
3. Choose a Scotia SelectPay installment plan from the options made available to you  (3-, 6- or 12-month plan periods) and review and agree to the SelectPay installment plan terms and conditions.  Note: Installment Plan options are enabled by Visa Canada. 
4. Confirm the purchase you want to convert and follow the prompts on the screen. Your receipt will include your installment plan details.
5. Once your purchase is posted to your Scotiabank credit card account (typically about 3-5 business days after your purchase), you can sign-in to the Scotia mobile app or your Scotia account online to see your plan status.

After Purchase Plans: You can also enroll in a SelectPay plan after you make a purchase on your eligible Scotiabank credit card account by logging into your Scotia app and following these steps:

1. Select your eligible Scotiabank Visa credit card and tap the Scotia SelectPay icon.
2. Choose the eligible purchase you want to convert into a SelectPay plan.
3. Choose a Scotia SelectPay installment plan (3-, 6- or 12-month plan) and review the applicable fees and/or interest.
4. Review and agree to the SelectPay Terms and Conditions.
5. Swipe right on the enroll button, and you're done.
6. Check your Scotia online banking site or Scotia mobile app for your plan status.

Installment plans, like the Scotia SelectPay, may offer you a convenient and flexible way to pay for eligible purchases over $100. However, like any financial decision, you have to consider whether this option is the right choice for you, based on your personal financial situation and spending habits. An installment plan can be a very useful financial tool; but, like any balance on your credit card, you need to make sure you have a plan in place to pay your installment plans on time and in full.