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How can ‘Plan It™’ Instalment Plans from Amex help spread the cost of your purchases?

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This article is sponsored by American Express

If you have an American Express® Credit Card – as opposed to a Charge Card – you may have seen Plan It™ appear in the App or in your Online Account for a feature – Instalment Plans from American Express

This is a way of spreading the cost of an item over 3, 6 or 12 month instalments, with the monthly instalment plan amount added to your ‘minimum due’ you are required to pay on each statement.

I want to look at it in more detail today, with particular reference to how it impacts spending towards sign-up bonuses or annual vouchers.

American Express Plan It

Plan It can be used with any purchase of £100+ which has appeared on your current statement or posted to your Account but not yet appearing on a statement, and has not yet been paid off.

You don’t need to apply to use Plan It – it is on your Account if you’re eligible – and no additional credit checks will be undertaken if you choose to use it.

Suitable transactions will have a small ‘Plan It’ logo in your Amex® App on your eligible transactions. Here is one of the HfP team taking advantage of The Wine Flyer’s generous bonus Avios promotion last month:

Plan It Instalment Plans

How does Plan It Instalment Plans work?

Click on an eligible transaction of £100 or more and it will give you the option to split your payment into three, six or twelve equal monthly instalments.

Each monthly payment will appear on a future statement as part of the minimum monthly payment due.

There is no interest to pay but there is a monthly flat fee added.

In the example below, the transaction above can be split into*:

  • 3 monthly payments of £45.44 (total £136.31)
  • 6 monthly payments of £23.44 (total £140.64)
  • 12 monthly payments of £12.44 (total £149.28)
Plan It' Instalment Plans

You can decide which eligible purchases you want to put into an instalment plan and select your choice of instalment period – 3, 6, 12 months for that purchase

How does this differ from paying interest and rolling over the charge?

In a word, certainty.

Many people are, understandably, wary of only making the minimum monthly payment on their credit cards and rolling over the balance. It is easy to lose control of what you owe.

With Plan It, you have full transparency – you know exactly how much you need to pay back, in your monthly instalments and fee. They are added to the minimum amount you have to repay each month. If you want to ensure that you clear your balance within a certain period, this is the way to do it.

There is an illustrative calculator on the Amex website which shows you the costs compared to a 30% purchases APR.

How does Plan It impact my spending towards sign-up bonus and annual vouchers?

Many HfP readers will be spending towards a sign-up bonus on a new American Express® Card or towards an annual voucher or reward, such as the British Airways American Express companion voucher.

It is important to understand how Plan It works in this scenario.

Basically, using Plan It has no impact on the effective date of a card transaction when it comes to qualifying for a sign-up bonus or annual voucher.

This has both good and bad sides. For example:

  • if you need to spend another £500 within a month to trigger a sign-up bonus and you make a £500 purchase but decide to split it over three months with Plan It, your sign-up bonus is still triggered
  • if you only need to spend £100 in the next month to trigger your British Airways American Express companion voucher, you cannot use Plan It to ‘push’ part of a large purchase into your next card year – the full transaction value will still count in the current card year

Conclusion

The best course of action with any credit card purchase is always to settle the bill immediately to avoid interest payments.

However, if you do find that you want to defer payment of a £100+ purchase whilst being committed to paying it off within a set period, Plan It is now there as an option.

You can find out more about Plan It on this page of the American Express website.

*For the purposes of this example, we have used an interest rate of 30% per annum. This may not be your personal rate and your actual rate may be more or less. The example assumes the monthly repayment is being made on the payment due date, and there are no other transactions on the Account. The total Plan It fee is based on the plan being created the day before the statement is generated and applied for each month of the duration of the plan.

Category

American Express Gold card, American Express Platinum card, Amex Rewards Credit Card, British Airways American Express, Marriott Bonvoy American Express

Comments (99)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Ian says:
    22 Nov22 November 07:33

    No interest is charged – just a fee apparently.

    Yet the advertorial goes on to say ‘For the purposes of this example, we have used an interest rate of 30% per annum’

    This is how the less well informed get lured into paying a high interest rate on borrowing without realising the true cost.

    If offered a 30% rate they would probably decline it.

    Not sure how Amex get around the rules on lending like this on a credit card.

    A far better article would have been one warning people to avoid it.

    • Andrew J says:
      22 Nov22 November 08:17

      But Amex wouldn’t be paying for an article if that was the tone of it.

    • Barrel for Scraping says:
      22 Nov22 November 08:19

      I don’t think Amex would have paid for an article telling you to avoid it. Always check whether an article is sponsored before believing it

  • Gary says:
    22 Nov22 November 07:33

    It works out about the equivalent of 13% interest rate !!

    • points_worrier says:
      22 Nov22 November 07:47

      The APR is actually around 25%.
      This precisely highlights my point. It should be illegal to not mention it, as you cannot correctly compare it to your other borrowing options.

    • points_worrier says:
      22 Nov22 November 07:49

      Note – the APR is calculated on remaining balance. In the example in the article, the average remaining balance is around £75 for one year, with interest of just under £13.

  • Bervios says:
    22 Nov22 November 07:48

    The Virgin VA+ credit card has also launched a similar plan which i have used alongside a plan on Amex. I prefer the Amex one as that disappears from your statement until the next payment date. The Virgin one stays on your account the whole time though it seems to be cheaper than Amex if you chooses the 3 month option.

  • Jake says:
    22 Nov22 November 07:48

    Is it just me thinks that APR, interest etc is actually too confusing for most.

    In the same way that it’s often said on this site most people actually know very little about BAEC, isn’t it well known the same applies to credit cards?

    Isn’t it actually clearer to tell people they are paying a fee and for how long they will be paying it?

    My personal view is people don’t care about rates and terms- they just want to know how much they will pay and for how long

    Whilst I’m not necessarily defending it, isn’t there an argument for simplification

    • Ben says:
      22 Nov22 November 08:08

      APR is meant to make it simpler for all as it takes into account all costs, including interest and other charges. So in theory you can have a like-for-like comparison between providers. AMEX high annual fees make an APR higher, of course.

      • Jake says:
        22 Nov22 November 08:19

        My thinking though is that APR is discussed by people who understand it and deem it as therefore as fair to compare borrowing costs (which it is).

        My view is that most people “in the street” probably don’t want to or can’t work out how much they will pay over certain time periods with different APRs.

        Most people probably want a statement with a £ sign next to it and a length of time

    • Ken says:
      22 Nov22 November 08:18

      Do you mean like loan sharking?

      Borrow £500 and pay pack £50 a week for 12 weeks.

      That’s nice and simple, easy to understand and none of this percentage nonsense – after all, what was the point of them in school ?

      • Jake says:
        22 Nov22 November 08:50

        @ken: yes. Exactly like that. Well said.

        I suspect most people would consider what Amex are doing far easier to understand and far more palatable than APR.

        What is the point if most people don’t really understand it and as Rob says the standard promo system makes no sense.

        Is what Amex doing right – no.
        Is the current approach fit for purpose – no
        Will it resonate with many people due to its simplification – yes

        • RussellH says:
          22 Nov22 November 10:35

          I think that you are right, Ken.
          Most people can get their head around cash flow – think Mr Micawber.
          Many people also find it simpler to get their head around smaller, more frequent payments than one, larger payment. Hence the fuss when weekly state pension payments stopped and were replaced by 4-weekly payments.

      • John says:
        22 Nov22 November 19:29

        What loan shark would accept such a low interest rate?? Borrow £500 and pay back £50 a week for 20 weeks more likely

    • Rob says:
      22 Nov22 November 08:20

      The APR promo system has lost its way. Having to include the annual fee in the calculation gives crazy numbers that make no sense and the £1,200 used in the example hasn’t changed in years. From my inbox, a LOT of people think they will only get a £1,200 credit limit.

      • memesweeper says:
        22 Nov22 November 08:37

        Can you close a Platinum card and still owe money to Amex, and opt to repay it without the annual card fee? If yes, the inclusion of the fee in APR is nonesense, if no people could borrow money and end up locked into the fee, so it rightly should remain in illustrative APR in my view.

      • Ken says:
        22 Nov22 November 09:05

        Annual fee for cards is an edge case.

        People might not understand APR, they might not understand compound interest or sadly even simple interest.

        Almost everyone can understand that 29.9% is higher than 11% is higher than 4.9%

        It works perfectly well, and it’s no surprise that companies (like car salesman) want to muddy the waters by saying it’s a fee or quoting simple interest.

        Dipping in the pockets of the less well off and financially illiterate.

        It’s shameful.

        • Rob says:
          22 Nov22 November 09:23

          Given a choice, BNPL is better than not paying off your credit card because you are forced to clear the debt. Logically you should repay debt over the life of the asset and no longer.

          The APR rules do work fine for the mass market. What would help the fee paying card market would be increasing the £1200 number to say £2500 since it would massively reduce the ‘APR including fee’ number.

    • Andrew. says:
      22 Nov22 November 08:35

      Well, I recently got into trouble from HR for explaining on a staff forum that the “Wages Loans” (deducted by payroll) wasn’t a “low rate”. The APR was not quite double what was being promoted to me by my main bank for a personal loan that morning. The internal advert had no worked example, and it wasn’t clear that the company was both a broker and a lender.

      One of the key outcomes on the comments from my posting was the number of people who didn’t understand a key element of APR is that 51% of people who apply for a loan with an APR of X% will get that rate.

      If you were going to be one of the 51% of people who was granted a payroll loan at the headline rate of xx.x% through this broker, you’d probably be one of the 51% who’d get a significantly lower rate from a mainstream lender.

      • memesweeper says:
        22 Nov22 November 08:38

        My daughter’s payroll lending scheme is a fixed fee regardless of the sum borrowed. Which would be an astronomical APR for a small sum. No APR is mentioned anywhere, which is frankly scandalous.

  • dst87 says:
    22 Nov22 November 07:52

    It’s such a bizarre offering from Amex. I can’t imagine using it and I agree with others that the incessant marketing of this product is frustrating.

    Amex is not the card to use when spreading the cost of a purchase!

    • JDB says:
      22 Nov22 November 08:30

      Amex earns huge sums from interest from its US cardholders, rather less (but still a surprisingly large sum) in Europe so wants to capture some the large pool of interest UK customers pay to other card providers and BNPL firms. The lines are blurring between the upper end of cards where providers make money mainly by charging an annual fee and the lower end where they issue free cards but make money on interest.

  • Rob H not Rob says:
    22 Nov22 November 08:11

    People will use it though, for sure.

  • NorthernLass says:
    22 Nov22 November 08:14

    Definitely a no from me. If you need to pay for items in installments there are plenty of interest/fee-free options. I can’t think that the majority of people who qualify for an Amex would be refused credit elsewhere.

    • NorthernLass says:
      22 Nov22 November 08:19

      That said, it’s not just Amex trying to wring extra money out of customers. All our cards seem to be bombarding us with “special offers” for balance transfers at the moment.

      • NorthenLass' Yorkshire Terrier says:
        22 Nov22 November 08:44

        Agreed. It may not appeal to HFP readers but there is a growing trend of BNPL especially among younger people.

    • JDB says:
      22 Nov22 November 08:25

      Qualification for Amex is no longer very difficult. You can get a Y1 fee free gold card on minimum wage. That’s part of their imagine problem; Amex is no longer an exclusive product.

  • AJA says:
    22 Nov22 November 08:16

    Be careful if you do try this. This sentence is very important:

    “The example assumes the monthly repayment is being made on the payment due date, and there are no other transactions on the Account.”

    I suspect using this service in addition to incurring other spend on the card means you may incur interest on the other spend if you do not pay off the balance in full. It is not clear if that is actually the case.

    I am another person who pays the balance in full every month so am not the target audience.

    • memesweeper says:
      22 Nov22 November 08:32

      I *hope* the reason for assuming there is no other spending is to keep the illustrative maths simple.

      If more spending (and the rest of the balance fully repaid every month) triggers additional interest then it’s misselling. I can’t see Amex doing that.

    • Broadheath says:
      22 Nov22 November 08:52

      I have used this service once. To answer your comment re interest, you do not incur interest charges at any point if you pay off the amount in full on your monthly statement. That in full balance requested by Amex includes the monthly element of the capital and fees incurred. The remainder of your loan is ignored.

      I actually did it just to see how it works from a convenience viewpoint and it is that.

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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