How Does American Express Pay Over Time Work?

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It’s always good to pay off your balance in full each month if you can—and indeed, with some American Express cards, you must pay on time, every month. But for added flexibility and purchase financing, Amex’s Pay Over Time feature may come in handy for consumers and small-business owners.

What Is American Express Pay Over Time?

American Express’s Pay Over Time feature essentially lets you turn a card with no preset credit limit into a more typical credit card, to a degree.

If your card is eligible, qualifying purchases will be rolled into your Pay Over Time balance, up to a limit established by American Express. At the end of the month, you can either pay your balance in full or the minimum required, which will also lead to interest charges.

Pay Over Time interest rates range between 15.99% to 22.99%. In addition, there could be a plan fee of 1.33% for each purchase amount moved into the plan.

How Do You Apply for American Express Pay Over Time?

You can’t apply for the American Express Pay Over Time feature. Instead, log in to your account or check on the app to see if it’s available. If it is, you can activate or deactivate the feature with a toggle.

American Express recently announced they will integrate Pay Over Time into their cards for small-business owners. Amounts over $100 will be added to the Pay Over Time balance.

How To Use American Express Pay Over Time

Once you’ve toggled Pay Over Time to “active,” certain purchases will automatically be added to your Pay Over Time balance. Even your annual card fee can be added. Some cards have minimum requirements regarding the purchases eligible for a Pay Over Time balance. For example, only charges of $100 or more can be added to a Pay Over Time balance for the Platinum Card. But the American Express Green Card has no such minimum threshold, so charges under $100 will also be automatically included.

As well, some charges aren’t eligible, notably cash advances or other card fees. 

Similar to a typical credit limit, there’s a Pay Over Time Limit, which you’ll see on your account details page. However, unlike a credit card, this doesn’t limit your spending. If your Pay Over Time balance is maxed out, additional charges will still go through. But you can’t pay it off over time. Instead, you must pay the full charge with your next bill, as usual.

If you want to remove the temptation to carry a balance and force yourself to pay it off each month—you can easily turn off Pay Over Time. Log into your account or through the app again and turn it off, switching it to “Inactive.”

How Does Amex Pay Over Time Impact Your Monthly Balance?

Once enrolled, you’ll see an Adjusted Balance, as it’s called. It includes:

  • Pay In Full: This balance is for smaller charges, which must be paid off each month.
  • Your Pay Over Time: This balance has its own minimum payment. If you don’t pay it off that month, you’ll see an interest charge on your next statement.
  • Plan Payment: If you’re also enrolled in the Plan It feature, you’ll see that amount due here.

Each month, you’ll pay off small charges not added to your Pay Over Time balance, plus your Pay Over Time minimum payment, and your Plan Payment.

For example, if you have $50 in smaller charges and $500 in your Pay Over Time balance (with a $25 minimum payment amount), your bill for that month would be $75 total. If you want to pay off all of your charges entirely—which you can still do even if you have a Pay Over Time balance—you’d pay $550.

Should You Use American Express Pay Over Time?

In a perfect world, it’s always best to pay off any financed balance every month, which will help you earn rewards while avoiding interest.

In an imperfect world, sometimes you’ll need to pay off a purchase over time. Even then, better options may be out there—such as a 0% intro APR card or even a low-cost personal loan with interest rates potentially lower than a card with the Pay Over Time feature enabled.

If those options aren’t available—for example, an inability to get approved for a new card or loan—the American Express Pay Over Time feature can offer credit. Just remember to reevaluate whether you really need the feature once you’ve paid off the balance, because it could lead to more long-term debt.

Key Takeaways

The American Express Pay Over Time feature shouldn’t be your first go-to if you need to borrow money. But if you don’t have any other options, the feature can be a welcome temporary relief. Just remember to turn off the feature to avoid financing more charges, so that you don’t get trapped in a cycle of debt.