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Credit cards offer 'buy now, pay later' options — but is it better than carrying a balance?

Is it a good idea to use a credit card's BNPL option over traditional providers?

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Terms apply to American Express benefits and offers. Visit americanexpress.com to learn more.

When you're shopping online, you've probably seen the option to split your purchases up over time with services like Afterpay, Klarna and Affirm. With 'buy now, pay later' services, also known as point-of-sale loans, consumers are able to split their purchases into installment payments due every two weeks over the course of six weeks. This means consumers can buy big-ticket items, like a mattress or computer, or smaller items, such as t-shirts and jeans, without having to pay the entire cost of the purchase up front.

While many consumers are flocking to BNPL providers for loans, credit card companies and payment processing services like Mastercard and PayPal are currently offering their own BNPL options or are planning on rolling out their own service. If you're hesitant to use a BNPL provider, you might be tempted to use the BNPL option offered by your credit card company. 

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Amex, Citi and Chase cardholders can choose to use a BNPL loan to finance their purchases by making the purchase with their credit card and then going to the respective website or online banking app to see if the item is eligible for a loan.

While it might seem like a good idea to use a BNPL loan through your credit card issuer over carrying a balance on your credit card each month, you might not be saving money in the long-run. Consumers who use the BNPL options offered by Amex, Citi and Chase will have to pay fixed monthly fees or a fixed APR.

The fee or APR are equivalent to or less than the APR you would get if you carried a balance on your card, so you could save money by using a BNPL loan. However, you'll have to compare interest rates or fees on the BNPL loan and your card. For all of the BNPL loans, your installment payment is added to your minimum credit card payment each month.

Below, Select looks at the different BNPL plans provided by Amex, Citi and Chase and delves into the pros and cons of each.

American Express 'Pay It Plan It®'

Amex recently announced that its 'Plan It' BNPL option was available to select U.S. cardholders with The American Express® Green Card, American Express® Gold Card and The Platinum Card® from American Express.

With, 'Pay It' consumers can make small payments on individual purchases under $100 throughout the course of the month, making it similar to paying off a portion of your credit card bill. With these smaller purchases, you're not financing them as you would with a BNPL loan.

'Plan It' is for bigger-ticket items; qualifying purchases must be above $100. With 'Plan It,' payment plans range from three months to 24 months. Not all purchases are eligible and in order to split the cost of a purchase over time, you'll need to use the American Express app or the website. Cardholders can use the 'Plan It' feature on up to 10 purchases of $100 or more.

With 'Pay It Plan It,' cardholders receive rewards on their purchases in the same way they do when they use their Amex card. If you used a BNPL loan from a provider like Afterpay, you won't receive cash back or rewards.

'Plan It' does come with one major drawback: You'll have to pay a fixed fee when using the service. The fee is based on your creditworthiness and is equal to or less than the APR that would apply to your charge, an Amex spokesperson tells Select. 'Pay It', on the other hand, does not have any fees.

While 'Plan It' does have a longer repayment period than many standard BNPL options, you may pay interest on those charges. Amex provides a 'Plan It' calculator to help consumers understand how much their monthly payments could be.

Amex is currently offering a $0 'Plan It' option* for plans made between Nov. 1 and Dec. 31, 2021. For a limited-time, consumers can split the cost of their holiday gifts without having to pay the 'Plan It' fee. However, this option isn't available to everyone so make sure to check your card's terms and conditions. Plans created after Dec. 31, 2021, will have a fixed monthly fee based on the fee disclosed in the cardmember agreement.

Furthermore, new cardholders who get the Blue Cash Everyday® Card from American Express, the Blue Cash Preferred® Card from American Express, or the American Express Cash Magnet® Card can get $0 'Plan It' fees on loans during the first 12 to 15 months of card membership*. Plans created after this period will have a fixed monthly fee based on the fee disclosed in the cardmember agreement.

My Chase Plan

My Chase Plan is the BNPL option offered by Chase and is available on most of its cards, such as the Chase Sapphire Reserve® and the Chase Freedom Unlimited®. With the My Chase Plan, consumers can use a BNPL loan to pay for select purchases that are over $100, were purchased less than 90 days ago and that have not been paid for on your regular credit card bill.

Consumers can finance purchases over three to eighteen months. The duration of your repayment period is based on your creditworthiness and your account history. Consumers are typically given one to two payment plan options and are limited to using the My Chase Plan on no more than ten purchases at a time.

Like the Amex 'Pay It Plan It', there is a fixed fee that consumers will have to pay which is based on the purchase amount, the length of the repayment period and other factors.

In order to use My Chase Plan, you can use the mobile app or the website to choose a purchase that you'd like to split up over time. You're still eligible to earn rewards on purchases under the My Chase Plan too.

Unlike Amex 'Pay It Plan It,' there are no $0 fee offers, so if you want a longer period of time to pay for your purchases, you might just opt for a new credit card with 0% APR introductory period like the Wells Fargo Reflect® Card (0% intro APR for 18 months from account opening; with an extension for three months (totaling up to 21 months) with on-time minimum payments during the intro period; 15.99% - 27.99% variable APR thereafter; see rates and fees). The introductory fee for the Reflect Card is 3% ($5 minimum) of the amount of each balance transfer for 120 days from account opening. After that, up to 5% for each balance transfer, with a minimum of $5.

Citi Flex Pay

You can use Citi Flex Pay in two ways, at Amazon or on purchases you placed on your credit card. Unlike Amex and Chase which have a fixed fee per installment payment, Citi Flex Pay has an APR with monthly installment payments. You'll also earn rewards as you normally would with a Citi Card.

If you choose to use Citi Flex Pay on Amazon, your purchase must be greater than $75 and you must select an eligible Citi Card at checkout to receive the BNPL option. With Citi Flex Pay on Amazon, loan lengths are from three to 48 months, depending on the value of the loan. For a limited time (offer ends December 23, 2021), Citi Flex Pay with Amazon is offering a 0% APR for loans up to 12 months, making it a good choice for people doing a lot of holiday shopping on Amazon.

If you use Citi Flex Pay on your credit card purchases elsewhere, they must be above $75 and made in the last billing cycle. In order to use Citi Flex Pay, you just select a purchase to see if it's eligible and if it is, you'll be given different payment plans with a fixed APR.

Bottom line

Using the BNPL option on credit cards is relatively straightforward: You make the purchase, check the app or the website to see if it's eligible for BNPL, and choose a payment plan with a fixed APR or fee.

One perk of using a BNPL loan is that you'll know upfront how much your monthly installment payments are. However, if you want to avoid paying interest or fees, you're better off just using the credit card and paying off your balance on time and in full each month.

You might also consider opting for a card with a 0% APR introductory period if you need a longer repayment period on your purchases. Consumers can take advantage of some of the promotional 0% APR or $0 fee BNPL offers that that Citi and Amex have, but these are only available for a limited time.

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Editor's note: This piece has been updated with additional information on the American Express 'Pay It Plan It' feature.

*For rates and fees of the Amex Green Card, click here

*For rates and fees of the Amex Gold Card, click here

*For rates and fees of the Platinum Card from Amex, click here

*For rates and fees of the Blue Cash Everyday from Amex, click here

*For rates and fees of the Blue Cash Preferred from Amex , click here

*For rates and fees of the Amex Cash Magnet, click here

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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