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Layaway. Installment plan. Interest-free payment plan. There are different names but they all function the same. It’s the act of buying and getting the item you want now and paying it back in increments over time. This is particularly helpful for large purchases when you know you’ll have available money soon!
It’s also essential for people who want to space out payments without going into debt and a good way to make their budget more manageable. While an installment plan isn’t necessarily a credit card replacement, it’s a flexible payment alternative. And one of the most popular options to buy now and pay later is a free app called Zip (previously called QuadPay).
What is Zip?
Traditionally, layaway plans will “hold” the item(s) until you pay off the total.
But with Zip, they pay for your purchase in full (so you’ll enjoy the item immediately), and then you’re responsible for paying back Zip in 4 interest-free payments over 6 weeks. In other words, you’re charged 25% of the total first, and then every 2 weeks, you’re charged another 25% until it’s complete at 6 weeks.
If you’re able, you’re welcome to pay ahead of schedule but if not, you’ll benefit from interest-free payments until it’s finished.
This method of payment makes it a safer route than charging purchases to a high-interest credit card that can potentially rack up debt if the entire bill isn’t paid off in time.
Can Anyone Qualify?
In order to be eligible to use Zip, you have to live in the U.S., be 18 years or older, have a valid mobile number (they text you a verification and payment notices) and either a valid credit or debit card to make a purchase.
However, not every transaction or purchase you make will automatically be approved as their system makes a new assessment each time. Depending on how large your purchase is and the pattern of your payback history, your Zip purchase may or may not pass. If it doesn’t pass, you can still make the purchase using your own method of payment, just not Zip’s installment plan.
Can Zip Be Used Anywhere?
The Zip VISA® Card that appears in your app can be used at any online retailer and in physical stores that accept Apple Pay or Google Wallet.
To use online or in-store:
- Open the Zip app
- Tap the VISA® Card to request a purchase
- Find the merchant/store name
- Tap “Pay with Zip”
- Enter the total amount (include taxes/shipping)
- Your estimated installments and due dates will show
- If you agree, then continue on to pay and enjoy your purchase!
There is a flat $1 fee per installment at non-participating retailers and it’ll be clear on the agreement page if this applies to you. This is similar to how banks charge $3 when you use an out-of-network ATM.
If the retailer is a supported partner, then there is no $1 fee.
Late Fees
Avoid paying late and you’ll avoid late fees.
Zip does a good job of text messaging you a payment reminder before the due date and they can also automatically deduct the installment amount from your account.
However, if you’re late, then there is a $7 fee. Still late after a week? $14.
Zip Also Works with Returns and Refunded Purchases
Say, for instance, you purchased a jacket for $100, and you’ve already paid the first $25 installment. When you get the jacket, it’s unfortunately too big, so you return the item for a full refund. Your refund would be $25, not $100. This is because Zip had footed the full purchase, and you had just paid the first installment. So you’ll get your first $25 back and the rest of the installments canceled.
Is Zip Right For You?
Zip is best for people who are mindful of their budgets, who want to be financially responsible and know they can pay off the purchase over a 6 week period. It’s a valuable alternative to using a high-interest credit card due to the spaced-out interest-free payments. Since Zip is available to use at practically every retailer, it makes it more convenient and flexible than other similar programs.
