Life is busy, so it can be hard to stay on top of important obligations, like repaying your credit cards. If you don’t plan well, it can be easy to miss a payment and fall behind. American Express recently introduced a new payment option that could help credit card holders stay on top of payments and remain financially healthy.
The Cheat Sheet spoke with Dory Butler, vice president of global consumer lending, new products, at American Express, to learn more about the new payment option as well as a recent study on millennials and finances. Here’s a peek into our conversation.
The Cheat Sheet: What study results surprised you most? Why?
Dory Butler: An interesting finding from the study is that nearly all (89%) of millennials make tradeoffs on spending, and these trade-offs can spur a sense of missing out. In the last 12 months, more than two in three (68%) millennials have missed out on activities or events because it didn’t fit within their budget.
Based on the survey findings, millennial spending strategies vary. When paying for a big-ticket item, such as a vacation or a large piece of furniture, nearly 2 in 5 (39%) would prefer to buy it and pay it off over time, such as with monthly payments. Tackling spending over time would help them keep on top of their other financial goals and cover daily expenses.
CS: What are some compromises and trade-offs millennials are making to cover expenses?
DB: What’s especially interesting is that a quarter of Millennials (25%) said they’re making spending tradeoffs daily, including bringing lunch from home because they ate out the day before or skipping vacations. Nearly half (45%) have had to skip a vacation with friends or family, and nearly one in four have missed a birthday celebration (24%) or a holiday gathering (21%). Although millennials aren’t missing out on everything, they do have to make difficult decisions around when to save and when to spend often.
CS: What is Pay It Plan It and how does it work?
DB: Pay It Plan It is a first-of-its-kind feature that gives American Express credit card members more flexibility over how they pay for the things they buy—all while earning rewards on purchases as they normally would. Pay It enables card members to reduce their balance by selecting smaller purchases and paying that amount as soon as it is posted on their account. Plan It gives card members the opportunity to set up monthly payment plans for purchases over $100 with a fixed monthly fee and no interest charges.
CS: What prompted American Express to create this feature?
DB: We know customers want more control and flexibility in managing their finances and we responded to that customer need. Pay It was inspired by a trend American Express identified in which card members were managing their credit card bill by making multiple payments throughout the month, before they received the statement. Now, Pay It makes it even easier to do this right from the app.
In addition, we recognized there are times when people need to pay for larger purchases, like a new couch or flights, over time. That’s why we designed Plan It, which helps card members stay in control of their finances in those moments.
Read more: How Many Credit Cards Should You Have?
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