What Is AmEx Pay Over Time and How Does It Work?

American Express's "Pay Over Time" feature allows its flagship products — like the American Express® Green Card, the American Express® Gold Card and The Platinum Card® from American Express — to function more like traditional credit cards.

These cards were initially introduced as charge cards rather than true credit cards. Unlike credit cards, charge cards don't have preset spending limits, nor do they have ongoing APRs. That's because, generally, you're not able to carry a balance on a charge card and must instead pay your bill in full each month.

But Pay Over Time changes the equation, allowing you to finance eligible purchases over a long term with interest. This is a convenient feature if you're unable to pay off your balance in full, but as with any carried balance, that can get expensive.

Here's how Pay Over Time works, and how to determine whether it works for you.

» MORE: Difference between credit cards and charge cards

How Pay Over Time works

1. AmEx automatically enrolls your card. You don't need to activate it or opt in. If you have the American Express® Green Card (see rates and fees), the American Express® Gold Card (see rates and fees) or The Platinum Card® from American Express (see rates and fees), you're automatically enrolled in Pay Over Time. If you don't wish to be enrolled, however, you will need to opt out. To do so, you can change your setting online or call American Express.

   • Pay Over Time is also available on the business versions of American Express's Green, Gold and Platinum cards. Holders of those cards are pre-enrolled as well.

2. The issuer assigns a Pay Over Time limit. There’s no overall preset spending limit for your card, but there is a limit to how much you can finance in purchases with the Pay Over Time feature. The amount you can spend changes based on factors such as your purchase, payment and credit history. All charges not added to a Pay Over Time balance, monthly payment plan or cash advance balance must be paid in full each month by the payment due date. (The Pay Over Time limit applies to the total of the Pay Over Time, cash advance, and plan balances.)

3. You make purchases as normal. Eligible charges are automatically added to your Pay Over Time balance each month. If you still pay off your balance in full at the end of the billing period, the card continues to function as it always has, with no interest applied. You’ll also continue to earn rewards on all purchases, regardless of whether you use Pay Over Time.

4. Interest charges accrue. When you use Pay Over Time, you'll be charged interest, which could be in the double digits.

5. You have options at bill time. The Pay Over Time feature allows you some choice in how you pay your bill. You’ll receive the amount due, which includes the minimum amount required for any ongoing Pay Over Time balance and the amount in excess of your Pay Over Time limit. But you can always elect to pay off both balances in full to avoid triggering the Pay Over Time option.

» MORE: What happens if I make only the minimum payment on my credit card?

Purchases that qualify

Eligibility requirements for purchases vary depending on the card. The Platinum Card® from American Express and the American Express® Gold Card only allow eligible purchases of $100 or more to qualify for the Pay Over Time option. The American Express® Green Card allows eligible purchases of any amount. Terms apply.

Transactions that don’t qualify for Pay Over Time include cash advances, traveler’s checks, other cash equivalents, gambling-related purchases (including those made at casinos), fees owed to the issuer (with the exception of foreign transaction fees) and certain insurance premiums.

» MORE: How to make the most of The Platinum Card® from American Express

» MORE: How to make the most of the American Express® Gold Card

» MORE: How to make the most of the American Express® Green Card

Potential drawbacks

The Pay Over Time feature adds payment flexibility for those times when paying off a balance in full isn’t possible, but ideally you wouldn't rely on this feature heavily. The steep annual percentage rate on Pay Over Time balances can get expensive and easily cancel out the value of rewards. Remember that you can opt out of the feature if you prefer.

And if you do need some wiggle room to pay off purchases, you might also consider AmEx's Pay It Plan It® feature, also available on all three of these cards. The "Plan It®" part of that feature allows you to pay off qualifying purchase amounts of $100 or more with a series of payments over time with no interest but a fixed monthly fee.

Another alternative is to get a credit card with low interest rate or a 0% intro APR period.

» MORE: Card issuers are offering cheaper ways to access your credit line