Easy Payment Plans in Malaysia – A Beginner’s Guide to Credit Cards’ EPP

What is an Easy Payment Plan (EPP)?

An Easy Payment Plan (EPP) is a plan offered by most banks’ credit cards, allowing you to buy items using an installment plan that gives you a low or even sometimes 0% rate on repayment for purchases made using credit cards over a specified time period, usually between 3 and 36 months.

So, people can buy things with a swipe of their credit card and repay the amount by installments, without worrying about not being able to settle the full amount at the end of the month, or ending up being charged with high interest on any outstanding balances each month (normally 15%-18% p.a.). However, have you ever wondered why banks are willing to provide this service without earning anything from you? If used properly, using EPPs can save (or earn, depending on how you look at it) RM100s and even sometimes RM1,000s on depending on what you purchase!

EPP Quick Navigation
List of Banks with 0% Easy Payment Plan
Why EPP?
Watch Out! – Why would the banks give you ‘free 0%’ credit?

List of Banks with 0% Easy Payment Plan:

The table above shows some of the famous merchant-bank collaborations that provide 0% EPPs for their clients and buyers. So if you are new to the “credit card world”, make sure that you check with your bank on the list of merchants that provide the EPP for your next purchase!

Why EPP?

It can be a great way to purchase expensive items under EPPs, if you genuinely want to spread the costs and let your money gain interest in your savings account instead, provided you have that amount of money in hand. The quick way is to think of an EPP as an interest free short term personal loan, and you can save the money you would have used upfront to spend  in an interest bearing account! See the case studies below:

Case Study 

Andrew wants to buy a Plasma TV for his family which will cost him RM5,000. To buy the plasma TV, he can go to the shop and purchase it either by cash, credit card or EPP. If he purchases it by cash or credit card, he will definitely get the TV, but a whopping RM5,000 cash will be deducted from his bank account. But, if he purchase the TV by committing to the 0% EPP with a 12-month tenure, then his debt will spread over the 12-month period and Andrew will only need to pay RM416.67 monthly.

So instead of paying RM5,000 in one go, Andrew can put the excessive cash into a savings account to earn some interests ; He can get up to 2% p.a. interest rate, and if he’s being clever he can do staggered multiple tenure FD deposits and earn well over 3% p.a. ! You can check which banks offer the highest interest rate in our  Best Saving Accounts in Malaysia article.

Check out the table below, it shows how much Andrew can earn at the end of the 12-month tenure with a 2% p.a :

Watch Out! – Why would the banks give you ‘free 0%’ credit?

Minimum Spending 

Some banks have a minimum spending requirement via the Easy Payment Plan to qualify for the 0% Easy Payment Plan. For example, Citibank imposes a minimum spending of RM500 while HSBC and OCBC Bank have the minimum spending of RM1,000 in order to qualify for their 0% Easy Payment Plan .

Missed or Late Payment

This is the most crucial part of the EPP that you have to watch out for : Banks and merchants rarely advertise this about their 0% EPP but if you miss a payment or pay the installment later than the due dates, the bank will cancel the 0%, and charge you with the normal interest similar to the credit cards instead (example :12.5%-17.5% which will be calculated on daily rest imposed on all outstanding balances from the stipulated Due Date or they will terminate the plan and demand you to settle full outstanding amount due.

You could put yourself in danger of getting into more and more debt than you can’t afford. So, before you engage in this easy payment plan, please do have a look on the terms and conditions carefully.

Overspending on Things you Don’t Need or Can’t Afford

Truthfully, 0% easy payment plan sure can help you get things that you need. BUT, this plan can also entice you into buying things that you don’t need or can’t afford. Spreading debt payments with zero interest can encourage a person to spend, spend and spend on multiple items at a time (which, by the way, is not a good way to SaveMoney).

The key here is to purchase on things that you actually need, not want (cliche but true!). For example, your 10-year old fridge broke down and you need a new one? EPP can help you purchase a brand new fridge that is within your means (don’t upgrade to a RM50,000 fridge that’s beyond your budget just because of the 0% EPP).

Some people want to buy items that you probably can’t afford (say, like the brand new iPhone 5) that they may be attracted to the idea of an interest-free credit. After all, it’s not going to cost them any extra, right? Wrong. While this certainly sounds like a great way to make a purchase, it is important to remember that the banks are not charities and they need profits to stay afloat (and you are the source of their income). Therefore, don’t give in to any unnecessary temptations and buy items which you don’t need, and essentially can’t afford, as deferring the payment will only increase problems further down the line.

Lastly, you need to fully understand what you’re getting into before committing in any 0% installment plans to avoid any bad debts coming your way, so think carefully before saying yes!

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Tagged 0% easy payment plan, 0% EPP, Easy Payment Plan, epp