A new way to pay – by interest-free instalments

[M@rcoPolo]

Just received an email from AMEX (linked to my AMEX Platinum Reserve) with the following:

Would you like extra time to pay for your large Card purchases? Or the peace of mind knowing you can spread the repayments over monthly instalments?

You'll get both when you enrol in Pay Your Way – a new feature from American Express. Enrol by 7/7/2016 and you can begin paying by instalments for eligible purchases you make on your American Express Card during the next 6 months – at 0% p.a. interest.


Almost too good to be true - then it goes on with...

EXAMPLE INSTALMENT PLAN
Let's say you enrol and set the duration of each plan at 6 months. Then make a $600 purchase.
Total amount of plan repayment is $618 over 6 months which includes the $600 purchase, 0% p.a. interest, and a 3% plan establishment fee.

So - 3% for 6 months (in advance) is over 6% on a yearly basis... not so attractive now. It does offer longer terms (up to 12 months) but does not spell out what the establishment fee would be for a 12 months period. There's a link to this FAQ: https://web.aexp-static.com/au/content/pdf/payyourway-faqs.pdf

Not so interesting as far as I'm concerned but could be appealing to some people out there...

 

[Pleb Status]

Better than the standard 20%+ interest rate at least. If you do not have the money and going to be forced to pay CC interest, you could certainly do worse.

 

[Dr Ralph]

Seems similar to the offerings by Harvey Norman etc. They advertise interest free purchases, but there are usually significant establishment payments required + monthly account keeping fees until the debt is repaid.

 

[Pleb Status]

Better than the standard 20%+ interest rate at least. If you do not have the money and going to be forced to pay CC interest, you could certainly do worse.

I actually need to temper my comment above as if you are forced to make six equal repayments, the flat 3% fee becomes an effective interest rate of ~10.3%pa.

 

[glenn.im]

How long have you been a customer with them ? More than a Year ?

 

[M@rcoPolo]

How long have you been a customer with them ? More than a Year ?

More than 10 years!

 

[johnny_yh2000]

Establish fee varies.
3 months repayment, establish fee is 2% of total purchase
6 months repayment, establish fee is 3% of total purchase
12 months repayment, establish fee is 4% of total purchase