Shoppers to be able to split credit card payments at the till – but you may end up paying a packet

Under Mastercard Instalments, credit card customers making purchases in store will be able to insert their card into chip and pin machines and given the option of making the full payment or splitting the cost in a scheduled repayment plan.

But shoppers who choose to pay off pricey purchases in monthly instalments will most likely have to pay an upfront fee or monthly interest on top of repayments, meaning those who have credit cards that charge no, or very little, interest would potentially lose out.

And customers who default on a repayment could be slapped with additional charges.

The service, which has recently been launched in Romania, is expected to be adopted by credit card providers in the UK during 2017.

While the idea of splitting the cost of expensive items into monthly payments may seem attractive to some shoppers when presented with the option at the till, bear in mind that better value can almost certainly be found using credit cards that offer interest-free spending.

Will this scheme be more cost-effective than paying the full amount on my credit card? It's not yet possible to accurately determine whether or not this payment option is going to be financially better or worse for individual cardholders. This is because it's up to individual card issuers to set the rates at which interest on monthly repayments and upfront fees are charged.

However, Mastercard has told us it believes the cost involved in making purchases this way will be lower than the interest charged on traditional outstanding credit card balances because there's a guarantee the debt will be cleared within a set timeframe.

But credit card options are available that are likely to provide a cheaper way of spending than Mastercard's instalments scheme.

A number of credit card companies are currently offering deals where customers pay 0% interest on balances, provided minimum monthly repayments are met. For some cards this 0% interest rate can last up to 28 months for certain customers.

How does Mastercard Instalments work?When you take out a credit card, you borrow money from the card issuer (generally a bank or building society) to make purchases.

While you do have to pay all of the money back (and you should aim to do so before interest rates kick in), the period in which you pay off your debt is more open ended. Provided you meet minimum payments, it's possible for you to have outstanding debt on your credit cards for years.

Mastercard's logic behind its instalments scheme is to make sure customers have a more structured borrowing period.

So, if you were to buy a £300 item on your credit card, but were to pay in three monthly instalments, the retailer would receive the full amount straightaway from your card issuer. However, you'd pay £100 (plus any interest or charges) to your card issuer on a designated day for three months.When purchasing using the instalments scheme, customers will be asked how much they want to pay off each month and what day they'd like to make the payment.

We've asked Mastercard what happens to customers who default on repayments under its instalments scheme and they say default fees will be determined by the card issuer.

The instalments scheme is expected to be adopted by credit card providers in the UK during 2017

Will Mastercard Instalments be available to all credit card customers?The scheme is an 'opt-in' service and Mastercard says individual card issuers will decide whether they want to sign up for the scheme.

If your card issuer does sign up, it'll get in touch to invite you to register for the service. This is then activated without the need for reissuing your credit card.

A Mastercard spokesperson says: "Customers can only sign up for the service once its costs and terms have been made clear. Once signed up, at the till, the cost and term of borrowing will be made clear on the payment terminal."

Do I have to spend a particular amount to use the scheme?

Any minimum spend will be a decision made by individual card issuers.

Will this payment method be available in all shops?

Because, in most cases, a software update of the payment terminal is all that's needed, the option to split payments should be available in most stores during 2017.

I'm not convinced by Mastercard Instalments – should I get a 0% credit card instead?

Do it right and credit cards are the cheapest way to borrow. You can get 0% for up to 28 months – get it wrong and you'll be stuck in debt for years. There are a number of cards available with 0% interest, but you need to make sure you clear the balance of your card within the 0% interest period, otherwise you will be hit by very hefty charges.

Check out our guide on the best credit cards currently available for interest-free spending.