Pay over Time

[Tyga11]

I'm wondering if anyone uses it.

I just charged $900 to my American Express card and there is a feature called 'pay over time'

I can pay $87 over the next year in equal payments. The total 'fee' is only like $4.

Why wouldn't I do this instead of paying the entire lump sum?

[aliiin]

Because of the fee and credit utilization %? Uh?

[Tyga11]

Originally Posted by aliiin

Because of the fee and credit utilization %? Uh?

The fee is only $4...

[c1pher]

I’m sure the feature is not for you.

[cmyx6go]

How is the fee only $4? Are you taking interest into consideration? $87 x 12 months is $1044. You'll pay $144 more than the $900 you charged. That's what, about 16% interest? In the scope of things, $144 over a year isn't a lot of money but why do it?

Plus the amount of money you owe makes up 30% of your credit score.

[spazzyfry123]

If you’re asking the question, I’d say their marketing worked.

[ASAP]

Yesterday, on one of the FB groups, there was some guy that posted he traded in a Civic Type R that he had negative equity on it for a new M4... he would then owe 107k on a car worth 91k...

Posts like this are why I am confident in the fact this next economic crash is going to be solid...

[///MPhatic]

The way I see it there are only 2 reasons you'd do this.

1. You can't pay the bill.
2. You can take the money you're not paying them, invest it, and over the same period of time make significantly more money on it than what you're paying them in fees.

[DETRoadster]

That's a great deal! Why stop at $900 then? I'd be slapping EVERYTHING on that card. its like free money. Report back in 12 months and let us know how its going.

[zx10guy]

This is the same as people buying stuff focusing in what the monthly payment is (ie auto purchases). Never mind what the final cost will be once you finally pay the thing off. As cmyx6go said above, you're paying an additional $144 in payments which is really interest in borrowing their money for the 12 months. And you don't even get the courtesy of a reach around as you pay $4, for the privilege of them giving it to you from the rear. That $4 to me is almost the same as the balance transfer fees credit cards charge.

[ASAP]

Originally Posted by zx10guy

This is the same as people buying stuff focusing in what the monthly payment is (ie auto purchases). Never mind what the final cost will be once you finally pay the thing off. As cmyx6go said above, you're paying an additional $144 in payments which is really interest in borrowing their money for the 12 months. And you don't even get the courtesy of a reach around as you pay $4, for the privilege of them giving it to you from the rear. That $4 to me is almost the same as the balance transfer fees credit cards charge.

People's heads would really explode if they knew what a 7% interest rate on a 30 year loan for a house really means ... do you think they know that they pay more than double for the house at that point?

edit - the reason why this works out in the USA... is people look strictly at cash flow... as long as I have positive cash flow I am in a good position... meaning 5 million on debt is irrelevant if I am sitting on 5.5M of assets... now that works, until it doesn't when people lose their jobs and can't make payments... in other countries this doesn't work because a) interest rates are far higher and b) the amount of leverage we allow here WOULD never fly there

[zx10guy]

Originally Posted by ASAP

People's heads would really explode if they knew what a 7% interest rate on a 30 year loan for a house really means ... do you think they know that they pay more than double for the house at that point?

I agree with you when you look at the full amortization table to see what the total payments are at loan term. But it's more complicated with home purchases. The assumption is the home is going to gain in equity and didn't over pay. You can claim some or all of the interest on your tax filing.

Just glad I'm sitting at 2.874% fixed on a 30 year loan and my vacation home at 3.25% fixed for 30 years. I don't see how people are still bidding up properties with the interest rate environment we're in now. Every home in my primary home's development has been sold when listed and all of them have gone for over asking with the recent homes having gone to settlement in the past month. There are three under contract now with no new listings still outstanding.

[cmyx6go]

Originally Posted by zx10guy

This is the same as people buying stuff focusing in what the monthly payment is (ie auto purchases). Never mind what the final cost will be once you finally pay the thing off. As cmyx6go said above, you're paying an additional $144 in payments which is really interest in borrowing their money for the 12 months. And you don't even get the courtesy of a reach around as you pay $4, for the privilege of them giving it to you from the rear. That $4 to me is almost the same as the balance transfer fees credit cards charge.

Remember that slogan "An educated consumer is our best customer"? Well, that certainly does not apply to credit card companies, car dealerships or banks. They prey on sucking people in who have no clue.

[Tyga11]

Originally Posted by cmyx6go

How is the fee only $4? Are you taking interest into consideration? $87 x 12 months is $1044. You'll pay $144 more than the $900 you charged. That's what, about 16% interest? In the scope of things, $144 over a year isn't a lot of money but why do it?

Plus the amount of money you owe makes up 30% of your credit score.

I was not. My credit score is over 800 and I’m in better financial position than people here. My mortgage is also 2.75%…lower than the peanut gallery.

Thanks for input.

[Maynard]

Originally Posted by Tyga11

...I’m in better financial position than people here. My mortgage is also 2.75%…lower than the peanut gallery..

So 'internet troll' pays pretty good? Just hoping to one day claw my way out of peanut gallery status and get with the real movers and shakers.

[Esteban]

[Esteban]

TBH, I would just pay it off. Why not, if you have the money, and it sounds like you do.

I have American Express too and I pay it off every month.

[G35POPPEDMYCHERRY]

oh man, fucking hilarious how blinded americans are. the insecurity of not being to wealthy is what these card companies pray on. but newsflash the wealthy people not flashy and likely totally hidden

[Esteban]

Don't charge more than you can afford. I don't really carry cash these days and just use a card (I have two plus a gas card) and then pay them off every month.

[David70]

Originally Posted by Tyga11

I'm wondering if anyone uses it.

I just charged $900 to my American Express card and there is a feature called 'pay over time'

I can pay $87 over the next year in equal payments. The total 'fee' is only like $4.

Why wouldn't I do this instead of paying the entire lump sum?

Pay $87 a month for 12 months = $1,044? Your initial charge was $900. Maybe the extra fee is $4, but it seems like you have a high interest charge also.

[///MPhatic]

Originally Posted by Esteban

Don't charge more than you can afford. I don't really carry cash these days and just use a card (I have two plus a gas card) and then pay them off every month.

This.

I haven't paid interest in ages (except on my home, which is very low).

I feel bad that I'm not paid more CBB. I know there are specials, and certain cards that pay more, but I just get paid by Discover every month and forget about it. It's not a lot, but it's money. I think $400-$500 a year.

Up to today.

[cmyx6go]

Originally Posted by cmyx6go

How is the fee only $4? Are you taking interest into consideration? $87 x 12 months is $1044. You'll pay $144 more than the $900 you charged. That's what, about 16% interest? In the scope of things, $144 over a year isn't a lot of money but why do it?

Plus the amount of money you owe makes up 30% of your credit score.

Originally Posted by Tyga11

I was not. My credit score is over 800 and I’m in better financial position than people here. My mortgage is also 2.75%…lower than the peanut gallery.

Thanks for input.

So why would you even consider stretching the payment over a year?