One financial product that’s proliferated the market in the past few years is the “pay-over-time” installment plan. Customers who need to make a large purchase are offered the choice to make payment plans with a fixed monthly fee, instead of carrying a balance forward and being subject to a card’s interest rate.
While we always recommend paying off your credit card balance in full each month to avoid being charged interest or fees, there are some situations in which you’re faced with a leftover balance at the end of the month.
Today, we’re going to look at the offering from American Express Canada in this category, known as Plan It, to see how it works and how it compares to carrying a balance on your credit card.
What Is American Express Plan It?
One of the oldest (but true) stereotypes about credit cards is that their high interest rates can lead to financial trouble. With annual percentage rates (APRs) averaging 20.99% for most credit cards in Canada, interest charges can certainly cause distress to those who spend significantly more than they can afford to repay.
This is where “pay-over-time” plans, or installment plans, enter the picture as an alternative to carrying a balance. These plans exist to simplify payments towards large purchases over time with fixed fees, instead of letting consumers deal with the byzantine complexities of credit card interest.
In Canada, a variety of banks have stepped up to the plate by offering consumers the choice to use “pay-over-time” products, such as CIBC Pace It, Scotiabank SelectPay, and American Express Plan It, amongst others.
These products charge a set monthly installment fee, a reduced APR, or some combination of the two to those who wish to split payments up for big purchases over time, instead of carrying a balance forward each month.
Amex Plan It is one of the simpler pay-over-time products to understand, because it imposes fixed monthly installment fees, instead of a more complicated APR calculation.
Currently, Plan It is being offered on the following American Express personal and small business cards:
At the moment, Plan It isn’t available to cardholders in Quebec, Nova Scotia, Nunavut, or Prince Edward Island.
How Does American Express Plan It Work?
To use Amex Plan It, you can either make a qualifying purchase of at least $100 and then create a plan, or you can opt to pay down a portion of your most…