Is Citibank planning to give the BNPL industry a run for its money? The invitation-only Installment Payment Plan (or IPP; perhaps they’ll give it a snazzier name when it’s ready for prime time) suggests so.
What’s so special about this IPP? Don’t all banks have one? Yes, but Citibank cardholders will be able to earn rewards on their installment payments. In contrast, other banks’ installment payment plans are explicitly excluded from earning miles, points, or cashback.
How does Citi’s IPP work?
At the moment, Citi’s IPP scheme is limited to targeted customers. You must transact at selected merchants and receive an SMS from Citibank inviting you to participate.
|❓ Which merchants are eligible?|
|The specific merchants are not named; I asked Citibank about this and was told they include a “wide range of merchants in the electronics, beauty, healthcare, education, clothes and apparels categories”|
Here’s how Citi describes the process:
- Perform transactions at selected merchants using your Citi Credit Card
- If eligible, you will receive an SMS sent to your mobile number registered with Citi
- Click on the offer link within the SMS. Please note that the offer has a limited validity period as indicated within the message
- On the offer page, select the repayment plan. Click on “View repayment schedule” to view the monthly payable amount
- Review the terms and conditions and click on ”Confirm and convert now” to proceed
Based on the T&Cs, IPP will only be offered for transactions of at least S$100. Installments will be spread out over three months, and there’s no upfront fee, or any sort of fee for that matter provided you pay your monthly installment on time.
If you miss your payment, the remaining balance is subject to a late payment charge plus daily interest at:
- S$3 per month or
- Retail interest rate set out in the statement of account, whichever is greater
You may also be subject to late payment charges as governed by the cardmember’s agreement on your Citi credit card account. Here’s a worked illustration from the T&Cs:
|Payment Due Date||12-Mar|
|Billed IPP installment amount||S$500|
|Retail interest rate as set out in the statement of account||26.9% p.a|
|Min. payment specified in statement of account||S$50|
|Payment made on 20 Feb||S$50|
|Interest charged on the billed IPP installment amount (S$500) from current statement date till payment date at retail interest rate 26.9% p.a.||S$1.47|
|Remaining unpaid IPP installment amount||S$450|
|Interest charged on the unpaid portion of the billed IPP installment amount ($450) from payment date till next statement of account at retail interest rate 26.9%p.a.||S$7.96|
|Total interest payable||S$9.43|
That’s a different approach compared to traditional BNPL platforms, which charge late fees instead of interest. These late fees may be fixed, or vary slightly depending on the size of the purchase.
|BNPL Platform||Installments||Late Payment Penalty|
|3 months||S$3 or retail interest plus late payment charge|
|Merchant List||3 months||S$20-60|
|Merchant List||3 months||S$5-30|
|Merchant List||3 months||From S$15|
|Merchant List||3 months||S$10-60|
|Merchant List||3 months or 4 fortnights||S$1-40|
|Merchant List||3 months||None|
You can earn credit card rewards with BNPL services as I’ve laid out here, but based on the comments it can sometimes be hit and miss.
Citi has clarified that IPP installments will earn rewards at the regular rate that the respective credit card normally would. In other words, Citi PremierMiles cardholders would earn 1.2 mpd, Citi Prestige cardholders 1.3 mpd and so on. Even better, Citi has further clarified that if you hold a Citi Rewards Card, you’ll also be eligible to earn 10X points on eligible transactions as per normal.
How is this different from Citi PayLite?
If you’ve tinkered around with Citi’s installment plans before, you may be aware of something called Citi PayLite. Here’s what I see as the main differences:
|Eligible Transactions||Selected merchants||Any merchant|
|Installments||3 months||Up to 36 months|
Citi PayLite is more akin to the traditional installment plans offered by other banks, and IPP is more in line with a BNPL service. However, Citi is conflating the two slightly, because in the IPP’s T&Cs it states that “the entire Purchase Amount will be reflected as a “Citi PayLite” installment loan in your Card statement of account”.
I should probably reiterate what I said before when I first wrote about BNPL services. BNPLs are great if you know how to use them; dangerous otherwise. If you use BNPL purely to optimize your rewards and never pay a cent of late fees, then go for it. If you think BNPL might tempt you to spend beyond your means, avoid it like the plague.
Since I’m approaching this purely from a rewards angle and intend to make payments in full and on time, there’s no reason why I wouldn’t opt for the IPP if I got the SMS on one of my transactions.
Has anyone received an invitation to the Citi IPP? What merchant was it with?