How Does an Installment Plan Work?
Buy now, pay later. If you’ve ever seen this phrase in an ad, chances are it was describing the benefits of an installment plan. Whether you’re getting a sofa, a fridge or a new set of work clothes, being able to take it home right away and pay monthly installments can be very convenient.
Unlike revolving credit, an installment plan is a short-term loan with a predetermined length and end date. It’s important to understand how it works so you can make good use of its benefits.
March 30, 2021 in Learn

Benefits of a credit card installment plan
Paying for your credit card purchases with an installment plan can provide you another way to pay your balance with flexibility and control. For example, with Plan ItTM, The American Express® Installment Program, you can choose the portion of your balance that you’d like to pay off in monthly installments. Plan It is a fully digital journey where you can create an installment plan using your Online Account or the Amex App. You will be offered 3 plan durations, anywhere between 3-12 months, based on your balance amount and account history1 — allowing for flexible plans, manageable payments, and a budget that works best for you.2
Does an installment plan affect your available credit limit?
When you sign up for an installment plan, the total amount of your purchase is automatically deducted from your available credit. Your monthly installment amount is included in the minimum amount that is due each month. As you pay off the balance, the amount you pay is then added back to your credit limit.
Tips for making the most out of an installment plan
Consider these tips to make the most out of your installment plan:
- Understand the different types of installment plans. For example, with some installment programs you may be able to choose specific purchases to plan for, while others, like Plan It, allow you to choose a portion of your balance.
- Know how much the loan will cost you over its lifetime, how much your monthly payments will be, and whether you will be able to make the payments.3
- Set up pre-authorized payments or enroll to receive payment alerts to avoid missing due dates or paying late fees. If your direct debit is set to pay your account’s minimum due, this will include any installment amounts. If your direct debit is set to pay the full balance due, it will not include any installment balances not yet due.
- Take the time to review and understand all the terms and conditions before confirming your plan.
Installment payments can increase how much you are spending
You may be tempted to choose an installment payment plan because of their convenience and flexibility. However, this may also tempt you to make purchases you don’t really need. Proceed with caution and do not spend more than you can afford.
Explore American Express installment plan options
Visit our Plan It™ page to learn more about the offers we have for American Express Cardmembers. When your installment plan is carefully planned out to match your ability to repay, it can offer benefits to keep your credit card payments manageable.
To learn more about how Plan It works, watch this instructional video below:
- Your ability to create each new installment plan will depend on an assessment of eligibility made at the time you seek to create an installment plan. In order to be eligible, you must have new purchases billed to your current statement. Prior months’ balances that have carried over are not eligible. Similarly, balances related to funds advances and balances at special rates of interest will also not be eligible unless we make a specific offer to you. We may also limit or otherwise restrict your ability to move balances to the installment program based on your account’s available credit or for any other reason. Please see your American Express Installment Program section in your Cardmember Agreement or the Plan It™ Terms and Conditions for more details.
- When you create an installment plan, you will be charged a monthly installment fee. The monthly installment fee percentage will be disclosed to you during plan creation. Please see your American Express Installment Program section in your Cardmember Agreement or the Plan It™ Terms and Conditions for more details.
- This is not a promotional or special rate offer. The fee charged is comparable to the interest you would have paid if you carried this balance on your account, without being in an installment plan. Please see your American Express Installment Program section in your Cardmember Agreement or the Plan ItTM Terms and Conditions for more details.
- Your ability to create each new installment plan will depend on an assessment of eligibility made at the time you seek to create an installment plan. In order to be eligible, you must have new purchases billed to your current statement. Prior months’ balances that have carried over are not eligible. Similarly, balances related to funds advances and balances at special rates of interest will also not be eligible unless we make a specific offer to you. We may also limit or otherwise restrict your ability to move balances to the installment program based on your account’s available credit or for any other reason. Please see your American Express Installment Program section in your Cardmember Agreement or the Plan It™ Terms and Conditions for more details.
- When you create an installment plan, you will be charged a monthly installment fee. The monthly installment fee percentage will be disclosed to you during plan creation. Please see your American Express Installment Program section in your Cardmember Agreement or the Plan It™ Terms and Conditions for more details.
- This is not a promotional or special rate offer. The fee charged is comparable to the interest you would have paid if you carried this balance on your account, without being in an installment plan. Please see your American Express Installment Program section in your Cardmember Agreement or the Plan ItTM Terms and Conditions for more details.
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