Many of American Express’ flagship credit cards actually aren’t credit cards at all. Instead, American Express’ most famous cards are actually Charge Cards.
This doesn’t make much of a difference when swiping your card, but it makes a significant difference at the end of each month. At the end of each month payment on charge cards is due in full. With a traditional charge card you don’t have the option to carry a balance as you do with a traditional credit card.
Because you have to pay off your balance in full each month (ie. you’re creditworthy) charge cards don’t have fixed pre-set spending limits. That means, in theory, you can spend as much on the card as you wish each month. You could even put a multi-million dollar charge on the card, provided you pay it off in full at the end of the month.
While charge cards are great for creditworthy consumers, they aren’t so great for the card issuers (provided everyone pays on time). That’s because the card issuer isn’t earning 15%+ interest on an outstanding balance. Instead, the card issuer is only earning the annual fee and merchant fees.
American Express Extended Payment Option
It is for that reason that I suspect American Express introduced the Extended Payment Option program. Essentially, charge card holders can enroll in a Pay Over Time program which basically turns the card into a traditional credit card. Currently, American Express only offers this program on purchases greater than $100.
What that means is, if you have an Amex charge card, you can now carry a balance on select charges greater than $100. Instead of the traditional penalties of missing a charge card payment in full, you’ll simply be charged interest on any Pay Over Time Balances.
While this sounds like a great option, keep in mind the variable APR on these purchases is fairly high (19.49%). The interest rate on the Chase Freedom card is just 16.24% by comparison.
Earn 10,000 Membership Rewards Points By Enrolling In Extended Payment
While I wouldn’t recommend anyone take this offer on its own, American Express is currently incentivizing customers to sign up. I recently received the following letter in the mail which informed me of the offer:
Based on the below mailer, when cardmembers enroll in the Pay Over Time program American Express will give them 10,000 Membership Rewards points. Keep in mind that is if you utilize the payment option or not.
I’ve been getting this mailer for a few months now and in the past I’ve always ignored it. However, this time I decided to do some research and couldn’t find any downside in signing up. I’m still going to pay my bill in full each month, so for me, there really is no reason not to accept some free points.
How To Register For The American Express Extended Payment Option
To be eligible American Express must target you for the offer. However, even if you haven’t received the offer in the mail it is still worth checking to see if you’re eligible.
To begin, visit AmericanExpress.com/ExPOenroll27 (this will likely change in the future). Included in my mailer was an offer code, however I didn’t ever need to enter that code.
Once you arrive at the above listed website, log-in to your American Express account. Once logged in you should find yourself on the below page:
This page explains how the program works and verifies the 10,000 Membership Rewards points offer. If you wish to sign-up, click the “I Agree, Enroll” button after reading the rather long terms and conditions window.
Once enrolled you should see the following message:
After enrolling you should find your Membership Rewards points in your account within 6-8 weeks.
Should You Enroll?
This is a question that I struggled with for a while so I thought I’d share my thoughts. I personally think you should only enroll if you don’t plan on using this feature. The whole point of an American Express charge card is to pay your balance off in full. I like using a charge card because it prevents me from spending money that I can’t afford. My goal is to never pay a dime in credit card interest.
With that, this offer for 10,000 MR points is worth at least $150. That’s a pretty good haul to enroll in a feature that I hope to never use. Plus, there is no charge to me for earning those points. So for that reason I think it’s a no-brainer to enroll.
However, if you’re looking to make a large purchase that you can’t immediately afford, this is not the way to do it. My offer showed a variable APR of 19.49%. If you make a $1,000 purchase, that’s an extra $194.9 in interest each year. That’s an awful lot of money to throw away.
Instead, if you really need payment flexibility, look to open a new credit card with a 0% APR introductory offer. That way you can still make the purchase, but avoid having to pay interest on the charge.
Final Thoughts
Note: This does not constitute financial advice, this website is for entertainment purposes only. Ok, now that the lawyers are happy I can move on.
I think this is a great offer for those who pay their balance in full each month and plan to continue that trend going forward. There is no fee for enrolling and essentially nothing changes on your account. If anything it actually adds a little safety to your account if for some reason you forget to pay your balance in full each month.
