American Express is this country’s premier issuer of personal and business charge cards. A charge card allows you to purchase items without cash, as long as you pay in full by the monthly payment date. If you fail to pay on time, you’ll be assessed hefty late fees and interest costs. Contrast this with the more conventional credit card, which allows you to space out your payments over time as long as you fork over the minimum payment each month. You pay interest on the unpaid balance, but avoid late fees as long as you shell out the monthly minimum.
American Express also issues credit cards, but millions of their charge card holders who wanted the flexibility of spacing out payments were out of luck. The brain trust at American Express identified the problem and responded with a trio of “Pay Over Time” features for their charge cards.
How Do Pay Over Time Features Work?
You must apply to, and be accepted by, Amex for these Pay Over Time features. Once accepted, you can choose to carry balances beyond the month’s due date. American Express will charge you a variable interest rate, currently just under 19 percent, on unpaid balances, but there are no late fees if you pay the minimum amount.
The three programs with Pay Over Time features are:
- Extended Payment Option: All charges over $100 are automatically moved to your Pay Over Time balance, subject to a pre-specified credit limit. You can pay any amount between the minimum amount due and the full balance each month. Certain charges are excluded, including Express Cash, Travelers Checks, casino and gambling transactions, and fees owed to American Express.
- Select & Pay Later: You can, with American Express’ approval, manually select charges of $100 or more to be moved to your Pay Over Time balance, subject to the standard limits and exclusions.
- Sign & Travel: Eligible charges of any size involving travel are automatically moved to your Pay Over Time balance. Eligible charges include hotel stays, airline tickets, cruises, car rentals, and foreign charges. The standard limits and exclusions apply.
Benefits of Pay Over Time
There is little or no downside to joining the Pay Over Time program. The benefits include:
- You get all the first-class benefits and services of the prestigious American Express charge cards while adding the flexibility of extended payments over time with interest.
- You decide how much of your Pay Over Time balance to pay each month, subject to minimum payment requirements.
- There is no additional fee to enroll, or obligation to use, the Pay Over Time program
- You use one card to receive all your American Express Membership Rewards Points, whether or not you utilize the Pay Over Time feature.
- You may qualify for extra Member Rewards Points to join the Pay Over Time program. Amex runs promotions periodically in which it offers a chunk of points (10,000 earlier this year) when selected cardholders enroll in the Pay Over Time program. You earn the bonus even if you always pay off your balance each month.
Applying for the Pay Over Time program carries no assurance that American Express will accept you. If you do not qualify for the program, all is not lost. You can apply for a regular credit card from American Express or another provider. But when a creditor declines your application, its useful to figure out why and correct the problem.
The usual culprit is a low FICO score which you can request for free from American Express. You can also take steps to boost that score by ordering and reviewing all three of your credit reports (from Equifax, TransUnion, and Experian). You should dispute any inaccurate information and have it removed. This alone can raise your score. You can also consolidate and reduce your overall debt, and make sure you pay all your bills on time. Living a righteous financial life will help improve your perceived creditworthiness and open avenues to new credit.
Author: Jeff Gitlen
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