Several of my American Express statements that have cut recently have included some amendments to the terms and conditions that highlight a new feature that American Express will be introducing for its credit cards, starting on August 30, 2017: “Plan It”. Jokes about the name aside, the feature is similar to “Pay Over Time” for charge cards and Chase’s “Blueprint” feature. All eligible card members will be automatically enrolled. As described by American Express at the FAQ page:
Plan It is a new feature that gives you the flexibility of paying off large purchases over a period of time. With Plan It, you can place a qualifying purchase into a plan, which is then paid off in equal monthly amounts over a period of time that you choose. Instead of paying interest (subject to your current Purchase APR), you will pay a monthly plan fee that will be disclosed upfront.
The “plan fee” is a fixed finance charge that American Express appears to cap at 1.06% of each purchase moved in to “Plan It”; the percentage of this fee will likely be significantly lower if your credit card has an APR in the teens. The primary usefulness of “Plan It” (and the reason it’s compared to Chase’s “Blueprint”) is that you do not incur interest charges on purchases (i.e. you will not forfeit your grace period), so long as you pay your billed balance not with “Plan It” plus the monthly amount of purchases in “Plan It”. (American Express terms this your “adjusted balance”.)
While “Plan It” doesn’t have much relevance to churners and probably encourages the wrong type of behavior, it does look well-designed to benefit consumers if used in an appropriate manner. I could see it being used as a tool to help eliminate higher-interest rate debt or to avoid high-interest rate debt due to emergency expenses for which one is unprepared. In the latter case, as long as you can pay your “adjusted balance” every month, you won’t be immediately incurring interest on your regular purchases. For consumers without many credit cards, that’s likely to be a very solid deal even if the “plan fee” works out to about equal or more than the card’s APR.
What are your thoughts?
