This guide works out what two big-bank instalment plans cost on a $1,200 purchase. It also covers the catches that matter more than the price.

The short answer

A credit card instalment plan is only a good deal if its true yearly cost is well below your card rate and you can make every payment. A fee of 0.9% a month on the original amount works out to about 19.4% a year over 12 months, which saves only about $11 compared with carrying $1,200 at 20.99%. A low-rate plan, such as Scotiabank’s advertised 5.99% for 3 months, is much cheaper. Paying your statement in full still costs nothing.

Several Canadian card issuers offer these plans, including BMO and Scotiabank. The Financial Consumer Agency of Canada (FCAC) treats them as a form of buy now, pay later and says you must request one from your card provider. The trade-offs below come from the issuers’ own pages and terms.

How a credit card instalment plan works

You make a purchase of at least $100 on an eligible card. Then, in online or mobile banking, you choose to convert it into equal monthly payments over a set term. Each monthly payment is added to your card’s minimum payment until the plan ends.

The bank charges for this in one of two ways:

• A fee. BMO PaySmart plans set up after purchase, outside Quebec, charge no interest but carry a monthly fee of up to 0.9% of the principal. Scotiabank’s terms also allow a one-time set-up fee or a monthly fee, shown when you pick the plan.
• Interest. Scotia SelectPay advertises rates starting at 5.99% for 3 months. BMO plans set up at checkout with participating merchants, and all BMO plans in Quebec, charge interest instead of a fee. In Quebec, BMO says the rate is up to 9.99%.

The fee or rate is shown before you confirm, and you cannot change the terms after the plan is set up. That makes the moment of setup the moment to do the maths.

What spreading $1,200 costs, plan by plan

The table compares the total cost of paying off a hypothetical $1,200 purchase. BMO says its fee is up to 0.9% a month, so we used that maximum. Your offer may be lower.

Hypothetical example, with the BMO fee at its 0.9% maximum, charged monthly on the original $1,200. Yearly rate is the annual percentage rate that produces the same payments. The 20.99% card rate is the typical rate Scotiabank uses in its own comparison, compounded monthly.

Why a 0.9% fee is not a 0.9% rate

A monthly fee of 0.9% sounds tiny. The catch is what it is charged on. BMO charges it on the principal amount you converted, and the fee does not shrink as you pay the balance down.

On a 12-month plan for $1,200, you pay $100 of principal plus a $10.80 fee every month, or $110.80. The fees add up to $129.60, which is 10.8% of the purchase. But you only owe the full $1,200 for the first month. By month 12 you owe $100 and you are still paying $10.80 to borrow it.

When you convert those payments into a yearly rate, the 12-month plan costs about 19.4%. The 6-month plan works out to about 18.3% and the 3-month plan to about 16.1%. A card at 20.99%, paid off in 12 equal payments of $111.73, costs $140.77 in interest. The fee plan saves you $11.17 over a year. That is a small reward for locking in a fixed payment.

Scotiabank’s terms show the same effect with a bigger fee. Its illustration of a 3-month plan with a 1.2% monthly fee totals 3.6%. On $1,200 that would be $43.20, or about 21.5% a year, which is more than a typical card rate. Treat that as an example from the terms, not a current price.

When a plan is cheaper

Interest-based plans at a low rate are a different story. Scotiabank’s own example of a $1,200 purchase on a 3-month plan at 5.99% shows $11.01 in total interest. That is about a quarter of what 3 months at 20.99% would cost ($42.22). If your bank offers a single-digit rate and you were going to carry the balance anyway, a plan can save real money.

The catches that cost more than the fee

Missing a payment can cancel the plan

BMO says that if you do not make your minimum credit card payment by the due date, your instalment plans are cancelled automatically. The remaining balance goes back on your card at your standard interest rate. Scotiabank’s terms let it cancel a plan without notice if your account is no longer in good standing, which includes being past due on a plan payment.

That turns a cheap plan into an expensive balance overnight. It can also add the costs that come with any missed credit card payment.

Your minimum payment goes up

Each instalment is added to your minimum payment. On the 12-month BMO example, that is an extra $110.80 every month on top of what you would normally owe. If cash is already tight, that bigger minimum is what triggers the missed payment above. The usual minimum payment rules still apply to the rest of your balance.

It does not free up credit

BMO says converting a purchase does not change your available credit. The $1,200 keeps counting against your limit until you pay it down. A plan does not create room for new spending.

Fees are not always refundable

BMO lets you cancel at any time without penalty, usually within two business days, and no further monthly fees apply. You cannot put the same purchase back on a plan. Scotiabank lets you cancel at any time after the plan posts, but says an upfront one-time fee is not refunded. In both cases, whatever is left goes back on your card.

How to decide, step by step

1. Ask whether you can pay the statement in full. If you can, do that. The grace period makes new purchases interest-free when you pay the full balance on time.
2. Read the offer on screen. Note whether it is a fee or an interest rate, and the term.
3. Work out the total. For a monthly fee, multiply the fee by the purchase and by the months. For $1,200 at 0.9% over 12 months, that is $129.60.
4. Compare with your other options. A balance transfer or a lower-rate loan may be cheaper for a larger amount.
5. Set up automatic payments. Cover at least the new, higher minimum so a missed payment does not cancel the plan.
6. Do not count on new spending room. The converted amount still uses your credit limit until it is paid off.

Frequently asked questions

• Sources, checked November 6, 2026: BMO: Managing your PaySmart installment plans; Scotiabank: How Scotia SelectPay works; Scotiabank: Scotia SelectPay terms and conditions (effective May 15, 2022); FCAC: Buy now, pay later plans (modified 2025-10-14).
• Method: Totals for a hypothetical $1,200 purchase were calculated in Python. Yearly rates were found by solving for the rate that matches each payment stream, then rechecked with a separate Newton’s method solver. Card interest at 20.99% was computed with the standard loan payment formula and rechecked month by month. The 5.99% example ($11.01) is Scotiabank’s own figure.

Important: This guide is general information, not financial or legal advice. Instalment plan fees, rates and terms change and depend on your card and province. Check the offer shown in your banking app before you accept it. Gizly is not paid by any bank mentioned here. See our affiliate disclosure.