If you’re looking for the flexibility of a credit card combined with the fixed payments of an installment loan, the Upgrade Card might be the right choice for you. Here’s how this unique process can save you interest.
The following post has been sponsored by our partner, Upgrade Card. The analysis and opinions in the story are our own and may not reflect the views of Upgrade Card. Learn more about our editorial policy
If you’re the kind of person who regularly carries a balance on your credit card, you know how quickly those interest charges can turn a once-manageable debt into something that feels insurmountable.
The Upgrade Card wants to make it easier to manage your balances and pay them off. By offering a line of credit with fixed monthly payments, the Upgrade Card is designed to let you make purchases when you need to without worrying about what kind of balance you’ll face at the end of the month. Instead, for each draw, you’ll make equal monthly payments until the end of your installment term.
If you’re used to carrying large balances on credit cards and making minimum monthly payments, the Upgrade Card could change your entire relationship to credit – and save you a lot of money in interest in the process.
How the Upgrade Card works
The Upgrade Card is a cross between a credit card and a personal loan. With the Upgrade Card, you’ll receive a credit line of up to $50,000 and an installment term length of up to 60 months*. That said, most lines will be $20,000 or less. You can use your Upgrade Card at retail locations or online, wherever Visa cards are accepted (except to withdraw cash at an ATM) – and at the end of every billing cycle, your balance will automatically be split into affordable monthly payments.That’s what makes the Upgrade Card such a game-changer. Instead of asking consumers to pay off their balance in full every month (or risk racking up serious credit card interest by repaying over the course of many years), the Upgrade Card lets you pay off your balance in installments based on your term length. Upgrade consolidates all of your purchases and draws for the month into one payment, which means you can budget for your bill ahead of time because you’ll already know exactly how much you need to pay.
The Upgrade Card is also great for people who have irregular income or expenses. During months with high expenses or reduced earnings, you can use your Upgrade Card to cover the costs of living. The card’s fixed monthly payment means you won’t find yourself facing down an extra-large credit card bill during a low-income month.
Yes, the Upgrade Card charges interest – as low as 6.99% APR for people with excellent credit and up to 29.99% APR for people whose credit isn’t as good. However, the card’s installment payment structure means that you’ll pay less interest over time than you would if you made minimum payments on the same balance on a traditional credit card. Plus, since you’re making fixed payments on your draws every month and not struggling to cover an ever-growing credit card bill, you might end up paying off your balance faster than you would with a traditional card.
Want even more reasons to love the Upgrade Card? There’s no annual fee, you won’t get charged any fees to use your card – including foreign transaction fees – and there are no prepayment fees if you decide to pay off your balance early.
How the Upgrade Card compares to other credit cards
The big difference between the Upgrade Card and a traditional credit card is, of course, the installment plan. When you use the Upgrade Card, your balance for each billing cycle is divided into equal monthly payments based on your installment term limit. This makes it easy to budget for your Upgrade Card payments, and it can save you a lot of money in interest over time.
Here’s an example from Upgrade that illustrates how much money you might save with the Upgrade Card. If you carried a $10,000 balance on your Upgrade Card with 18% APR and a 24-month installment term limit, Upgrade would set your monthly installment payments at $504.29. If you made all of those payments as scheduled, you’d pay off your balance in 2 years and pay $2,102.71 in interest.
If you carried that same balance on a traditional credit card with 18% APR and only made the minimum payment, it could take 28 years to pay off your balance – and you’d pay $14,423.16 in interest. That’s more than the cost of your original debt.
|Upgrade Card||Traditional credit card|
|Time to pay off the balance||2 years1||28 years2|
|Interest paid over that time||$2,102.713||$14,423.162|
How the Upgrade Card compares to balance transfer credit cards
If you are carrying a balance on your existing credit cards, you might be asking yourself whether you should transfer those balances onto a balance transfer credit card. Although the best balance transfer credit cards give you a lengthy 0% intro APR period to help you pay down your balances interest-free, balance transfer credit cards also charge fees every time you transfer a balance – usually between 3% and 5%, or $30-50 for every $1,000 you transfer.
The Upgrade Card has a different solution to help you pay off your credit card balances. You can’t transfer a balance onto your Upgrade Card, but you can make a draw from your Upgrade line of credit and have that money sent directly to your bank account. From there, you can use those funds to pay off your credit cards while continuing to make your fixed monthly payments with Upgrade.
How the Upgrade Card compares to personal loans
Personal loans are considered installment loans, just like the Upgrade Card. Here’s the big difference: When you take out a personal loan, you receive a lump sum of money that you must pay back in full by the end of the loan period. When you enroll with the Upgrade Card, you receive a line of credit that you can draw from for up to five years.
In other words, you’re only required to pay back what you borrow. If you have a $10,000 line of credit with the Upgrade Card but you only make $2,000 in purchases over your installment term, you only need to pay back $2,000 plus interest. If you take out a $10,000 personal loan, you’re responsible for paying back the entire $10,000 before your loan term ends.
Plus, the Upgrade Card functions like a Visa card. Use your Upgrade Card wherever Visa is accepted, whether that’s online or at stores, restaurants, gas stations and more.
How the Upgrade Card compares to third-party installment payment services
Some third-party installment payment services let you shop online at selected retailers and pay off your debt in installments. The Upgrade Card gives you even more spending freedom, allowing you to shop both online and in-person at any retailer that accepts Visa. Plus, you won’t have to apply for a separate installment loan every time you want to pay off a purchase over time.
Is the Upgrade Card the best way to save interest on your purchases?
If you carry a balance on your credit card from month to month, the Upgrade Card can help you save interest on your purchases long-term. When compared to making the minimum payments on a traditional credit card, the Upgrade Card is the clear winner – and its Visa functionality offers advantages not available through personal loans or third-party installment payment services.
Although the best way to save interest on your purchases is to pay off your credit card balance in full every month, the Upgrade Card can be a good option for people who don’t always achieve that goal. The Upgrade Card is also a good option for people who want to draw from a line of credit, use the money to fund a large purchase or pay off other credit card debt and make steady installment payments on their balance over time.
If you’re looking for the flexibility of a credit card combined with the fixed payments of an installment loan, the Upgrade Card might be the right choice for you. Draw from your line of credit whenever you need it, budget in advance for your monthly payments and pay down your debt before your installment term expires. If you’re the type of person who usually carries a credit card balance over several months, the Upgrade Card is designed to help you save money on interest while making fixed monthly payments. And if you want to pay your Upgrade Card balance off early, that’s always an option.
* Credit Lines opened through Upgrade feature APRs of 6.99%-29.99% and line amounts ranging $500 to $50,000. The lowest rates require autopay and the majority of the line amounts will be $20,000 or under. For example, a $10,000 transaction with a 60-month term and a 19.99% APR has a required monthly payment of $267.97. The APR on your draw may be higher or lower. Your rate, line amount and default term depend on maintaining a qualifying credit score, your credit usage history, requested amount and other factors.
- Example of amortization period using Upgrade Card
- Calculations use Bankrate minimum monthly payment calculator assuming a $10,000 starting balance, “interest + 1%” minimum and an interest rate of 18%, which is approximately equal to the national average rate for good credit” (Source: https://www.cardrates.com/).
- Interest of $2,102.71 assumes a $10,000 charge and installment payments of $504.29 for 24 months. Installment payments calculated with 18% APR and 24-month term accounting for interest accrued between the charge date and the due date 51 days later.