American Express Launches “Pay It Plan It,” an Interest-Free Installment Plan for Cardholders

Photo credit: frankieleon, CC BY 2.0.

American Express has a new way of paying off your credit card bill: the installment plan.

It’s called Pay It Plan It, and it gives cardholders the option to pay their charges off over time. Yes, this is what lot of us were already doing—it’s kind of how the whole credit card system works—but this time we won’t be paying interest.

We will, however, be paying fees.

Here’s how the press release explains it:

With Pay It, Card Members can use their American Express App to select smaller purchases and pay that purchase amount right away with a tap. With Plan It, Card Members can select purchases over $100 and choose to make monthly payments ranging from three to 24 months with a fixed fee and no interest. Card Members can also continue to pay their bill at the end of the month, either the minimum due, the full amount or anything in between, just as they normally do. No matter which way a Card Member chooses to pay, they can earn rewards and build credit.

So… instead of paying your credit card bill off in full, or making a minimum payment or doing whatever you usually do, you get to open an app and choose which purchases you’ll pay off right now. Then you get to plan when you’re going to pay off the rest of them.

When Card Members click on the purchase and choose to “Plan It,” they will be offered up to three Plan options, with terms that range from three months to 24 months. A monthly Plan fee is calculated and displayed along with the monthly payment so there are no surprises, and Card Members can choose the Plan that is right for their needs and budget. The monthly Plan payment will be added to the Card Member’s minimum payment due each month.

I will be honest: I do not see the appeal. I guess it’s like the Snowball Method of debt repayment, in that you might get a little mental boost from being able to pay off a $10 charge and another mental boost knowing that you’ve put $20 towards a $100 charge, but… it feels kinda like Andy Dwyer announcing that specific physical activities are going to burn calories from specific meals.

I’ve always thought of credit card spending as “putting expenses into a big pile that you’ll have to pay off later, ideally all at once.” Now Amex wants people to start thinking of credit card spending as “individual purchases that you can pay off now, or pay in installments.”

I’d also like to know how much those fees are. Marketwatch provides some insight:

The flat fees customers must pay on top of their installment will vary and will be roughly equivalent to the amount of interest consumers would pay on those purchases if they did not pay them through the installment plan. In some cases the rates will be better, or the same, but none will leave consumers “worse off” than paying traditional interest, [Kartik Mani, global head of consumer lending at Amex] said.

Marketwatch, incidentally, headlined their article “American Express is making a major change — because of millennials,” which might suggest that I am too much of an Old Millennial to get excited about this. I’m already stuck in my credit card ways, and change is weird and confusing.

What about you? Does Pay It Plan It sound like a good plan? Are there advantages I’m missing? Anyone going to sign up?

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