AMERICAN Express is launching a “world first” new payment plan for Australian customers giving them the option to split large purchases into monthly instalments at zero per cent interest.
The “Pay Your Way” scheme is intended to appeal to the two-thirds of credit card holders who use their card to pay for large purchases during life events such as getting married, having a baby or moving house.
“We’ve had a lot of feedback from customers that they were looking for ways to spread large transactions over smaller payments during those key borrowing moments,” said Austin Huntsdale, VP of consumer products for American Express Australia New Zealand.
Rather than pay interest on the payments, customers pay an “establishment fee” calculated at two to four per cent of the initial purchase price, depending on the length of the repayment plan.
Customers enrol in the program by selecting a minimum purchase amount of $300, $500 or $1000 and a repayment term of three, six or 12 months. For the following six months, any purchases equal to or above the chosen amount is automatically converted into instalment plans.
For example, a $600 purchase on a six-month plan would incur an $18 establishment fee for monthly payments of $103, bringing the total cost to $618.
“It’s a very competitive way to finance a transaction, as well as not having a huge debt you need to pay off hanging over your head,” Mr Huntsdale said.
The product is being trialled in Australia ahead of a possible global rollout for the company, which is attempting to position itself in the consumer lending space.
It joins other credit card lending options in Australia including zero per cent balance transfers and Payflex for business charge card holders.