Can Overseas Expenses Be Paid in Installments? What Are the Alternative Methods?

 

Is it possible to pay your overseas expenses in installments? Are there alternative ways to make installment payments for your overseas expenses? Continue reading to explore installment options with credit cards and other payment methods!

 

Are there installment options for overseas expenses?

 

 

As of July 31, 2023, installment payments for overseas expenses made with credit cards were abolished by the Banking Regulation and Supervision Agency (BDDK). With BDDK's regulation, installment payments cannot be made for transactions related to printed and bullion gold, telecommunications, direct marketing, airline expenses, travel agencies, accommodation-related overseas expenses, overseas transactions, food, beverages, alcoholic drinks, fuel, cosmetics, office supplies, and purchases of gift cards, gift certificates, and similar items that do not involve any tangible goods or services.

The Turkish Republic of Northern Cyprus (TRNC) is the only exception to this decision. For expenses related to TRNC, installment periods continue to be applied for 3 months. Therefore, for transactions made abroad with credit cards from Turkish banks, except for TRNC, there is no installment option. We recommend planning your overseas expenses considering this situation.

 

What expenses can be paid in installments abroad?

 

 

The option of paying for overseas expenses in installments with credit cards from Turkish banks was abolished by the Banking Regulation and Supervision Agency (BDDK) in 2023. This decision covers overseas-related expenses such as airlines, travel agencies, and accommodation and applies to purchases made abroad. Therefore, we recommend planning with the knowledge that installment payments cannot be made with Turkish banks' credit cards for overseas-related or overseas expenses.

 

Using installments for online overseas shopping

 

The BDDK decision to eliminate installments for overseas shopping made with Turkish credit cards also applies to online shopping. Therefore, there is no installment payment option for online purchases from foreign-based websites. However, some banks may offer the possibility of converting lump-sum payments into installments afterward. This service, which may vary from bank to bank, usually applies with specific interest rates. So, while direct installment options are unavailable for online shopping from abroad, you can consider your bank's post-payment installment options. We recommend contacting your bank to find out whether your bank provides this service and its conditions.

Alternative Ways to Pay Overseas Expenses in Installments

 

 

Direct installment payments cannot be made for overseas expenses with credit cards from Turkish banks. Following the decision made by BDDK in 2023, banks have developed alternative solutions on this matter. These options can be listed as follows:

 

Converting Lump-Sum Payments to Installments

 

Some Turkish banks offer the service of converting lump-sum payments made with credit cards into installments afterward. This service may vary from bank to bank and is generally applied with specific interest rates. For example, Yapı Kredi Worldcard and İş Bankası Maximum Card offer the possibility of converting your lump-sum purchases into installments. You must contact your bank’s customer service or use Internet/mobile banking applications to benefit from such services.

 

Using Cash Advances

 

You can meet your overseas expenses by taking a cash advance from your credit card and paying the amount back in installments. However, it is essential to note that cash advance transactions are usually subject to high interest rates and additional fees. Therefore, before using the cash advance option, you should learn about the conditions and check your financial situation.

 

Special Financing Options

 

Some financial institutions or travel agencies may offer special financing or payment plans for your overseas expenses. These options can provide installment payment opportunities in exchange for a specific interest rate or service fee. Before using such services, we recommend carefully examining the reliability of the organizations and the terms offered.

 

BNPL (Buy Now Pay Later)

 

BNPL (Buy Now, Pay Later) lets you immediately purchase a product or service and pay for it in installments over a certain period. Like credit card installment payments, BNPL offers more flexible payment plans and interest-free installment options, which is advantageous. To learn more about the BNPL model, visit Papel Blog.

 

Alternative Payment Methods

 

International money transfer services like Western Union and MoneyGram can be used primarily for large payments or urgent cash needs. Additionally, direct money transfers between bank accounts can provide advantages regarding additional fees and exchange rates in certain situations.

 

 

Advantages and Disadvantages of Using Installments for Overseas Expenses

 

 

The Banking Regulation and Supervision Agency (BDDK) prohibited the installment payment of overseas expenses made with credit cards to control foreign currency outflow and protect the country's economy. Therefore, no direct installment option for your overseas expenses is made with credit cards. However, if you choose to use alternative methods such as cash advances and thus make payments in installments, we would like to share the advantages and disadvantages with you.

Paying in installments, especially when making a large payment, offers the advantage of managing your budget better by spreading the payment over time. In addition to this advantage, installment payments have some disadvantages.

 

Disadvantages of Installments

 

High interest rates and fees: Installment transactions usually require additional interest and fees, which can increase the total cost.

Debt burden: Installment expenses can increase the debt burden in the long term, limiting your financial flexibility.

 

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