Cell phones are a wonderful addition to our daily lives, but they often come with a hefty price tag. While we offer a variety of budget-friendly phones, we also realize that some people would prefer to be on the cutting edge of technology. That’s where Splitit comes in: Splitit makes buying a phone easier by allowing you to finance your phone purchase over time.
How does Splitit work?
Splitit makes buying a phone easier by allowing you to use your credit card to pay over time. The best part is that there’s no application form, no interest, and no added fees. Rather than paying a lump sum, you’ll be able to pay for your phone in smaller amounts over time.
Splitit: A “reverse savings account”
Many of us have experienced the process of saving up for some larger purchase. Maybe you saved up for a toy when you were a child, your first car or that new TV. To save, you likely set money aside each month in a savings account (or cash into an envelope). We earmark this money for something we’re saving for, such as a larger purchase or special item.
Saving each month is an exercise in patience and the resistance of temptation to spend the money. These are great lessons to learn…but it’s easier said than done.
This is where a monthly installment plan, such as Splitit, helps you get the best of both worlds.
With Splitit, you get your purchase right away. You don’t have to wait to enjoy the item you’re saving for because you’re able to get it upfront. Start enjoying your purchase right away, and then focus on making monthly payments.
Think of a monthly installment plan as a way to have what you want upfront, but a smart, manageable process for paying (or saving) towards it each month. You get to enjoy your purchase while knowing exactly what to expect for a payment each month. Talk about a win-win!
The Fine Print: Splitit and Credit Authorizations
What is credit authorization and what should you know about how it impacts your finances?
A number of merchants use a credit authorization, or hold on your credit card, as a way to request a charge in the future. This is common practice among hotels, where you give them a credit card number when you book a room. The card is not actually charged until you spend the night or use the hotel facilities.
You’re also likely familiar with this concept if you’ve ever rented a vehicle. Rental car companies have used this practice for years. They request authorization before you rent, and then charge your card once you’ve returned the vehicle.
Basically, it’s a way for companies to know there is enough credit available to complete a purchase available. If you can’t present a credit card with enough of a credit line, then the purchase can’t be completed.
Why do I need to know what a credit authorization is?
It’s important to understand credit authorizations because Splitit uses your existing credit card. Splitit obtains a credit authorization to process your purchase. They work with Visa and Mastercard, following each credit card company’s regulations and ensuring authorization is obtained in the correct manner.
Splitit maintains a hold on a consumer’s credit card for the entire amount of purchase but charges only the current installment that is due each month. It temporarily decreases your available credit limit by blocking the total amount of the purchase, until the transaction is complete.
As you keep paying each installment on a monthly basis, the amount originally held on your credit card gradually decreases, until the purchase is completely paid off.
Fortunately, this does not impact your credit score since Splitit is utilizing your existing credit line. Another bonus is Splitit doesn’t run your credit report. Running your credit report can ding your score if its checked too often with multiple inquiries.
We hope this helps you understand Splitit and allows you to consider purchasing the phone you really want. Splitit makes buying a phone easier!