Do I Have to Pay My Credit Card in Full Every Month?

Spending isn’t static. Our lives – and the economy – are constantly changing. Frustratingly, a necessary purchase may come along when money’s tight. And even when money isn’t tight, sometimes it’s better for your budget to pay off expenses over time.

Fortunately, credit cards don’t need to be paid off in full every month. You can carry a balance at the expense of interest charges. Unfortunately, that’s not the case for traditional charge cards.

But some Amex Cards, including The Platinum Card^®, the American Express^® Gold Card, and the American Express^® Green Card, bridge the gap between traditional charge cards and typical credit cards. These Cards, like charge cards, have no preset spending limit. But thanks to the American Express Pay Over Time feature, Card Members can choose to carry a balance with interest up to their Pay Over Time Limit.

This article explores how responsibly carrying a balance can provide you with the financial flexibility to confidently make major purchases. We’ll also take a look at how Pay Over Time can be used to carry a balance on certain Amex Cards, and what makes this feature different from a typical revolving credit limit.

For people who use credit cards, common wisdom says that it’s best to pay off your statement balance in full every month. And for good reason: Doing so, you can avoid interest charges and help stave off debt. For those who use charge cards, a full payment at the end of every statement period is mandatory. The requirement to pay monthly statements in full is part of what defines a traditional charge card, along with having no preset spending limit.

The good news is that both credit and charge cards usually have a grace period – the time between the end of your billing cycle and your payment due date, in which interest typically won’t be charged (provided you are not carrying a balance).¹ In other words, just using a credit or charge card for purchases could afford you a couple of weeks to pay them off before having to pay interest – as long as your card issuer offers a grace period and you’ve been paying your monthly statement balance in full and on time each month.

So, you should pay your card’s statement balance in full each month if you want to avoid interest charges. And, as long as you pay in full by the statement due date, you’ll enjoy the benefits of the grace period.

What happens when you want to pay off a necessary purchase over time, but the grace period isn’t long enough to match your budgeting needs? With the ability to carry a balance, credit cards can come in handy, even though they charge interest. Their payment flexibility can go a long way toward managing monthly expenses, especially if you mindfully carry the balance and make a clear plan to pay it off before debt gets out of hand. For example, car repairs can be costly and unexpected. Charging the transaction to a credit card can grant you the convenience to pay it off over two months so it takes a smaller bite out of your budget.

To help cut down on overall interest charges, you can make multiple small payments – maybe weekly – instead of waiting to make a bigger payment on the payment due date each month. That lowers your average daily balance, which is used to calculate credit card interest charges. Or use a 0% intro APR credit card, which makes it possible to carry a balance without interest for as long as the promo period lasts. This makes for a cost-effective way to finance predictable big ticket purchases, like a new furniture set or kitchen appliances.

While charge cards boast unique benefits like the ability to make bigger purchases without maxing out the card, the “catch” is that they traditionally require every statement balance to be paid off in full, on time. Otherwise, expect late payment fees and potential impacts to your credit history.

The Platinum Card, the Amex Gold Card, and the Amex Green Card were originally presented as charge cards. But since Pay Over Time was introduced, these Cards can operate differently than traditional charge cards. Specifically, Platinum, Gold, and Green Card Members have the option to use their Cards like traditional charge cards, with no preset spending limit² and the requirement to pay off their monthly statement in full. Or they can activate the Pay Over Time feature, which enables them to choose whether they want to carry a balance, with interest, up to their Pay Over Time Limit (more on that later). 

In either case, Card Members will still earn rewards the way they usually do, and Card benefits don’t change. But any balance that exceeds your Pay Over Time Limit must be paid in full by your payment due date, and interest is charged only if and when you choose to carry a Pay Over Time balance.³

Say you typically use your Gold Card for grocery and dining purchases – and maybe the occasional flight – and always pay your statement balance in full. But you’re planning a DIY remodel of your bedroom and know it’s going to cost a pretty penny. One option is to charge those remodeling expenses – drywall, spackle, paint, furniture, bedding – to your Gold Card.

This has a few benefits. For one, you’ll get to rack up some rewards. And, like a traditional charge card, you can enjoy a flexible spending limit.² Better yet, when it’s time to pay your bill, you can pay your balance in full, or you can carry a balance, up to your Pay Over Time Limit, and pay it off over time with interest – similar to a typical credit card. But remember: If you want to use Pay Over Time, the feature must be activated before you make the charges you intend to pay over time. If the feature wasn’t active, you can’t retroactively add charges to your Pay Over Time balance.

The good news is that Card Members are automatically enrolled in Pay Over Time, which gives you the choice to pay in full or carry a balance from the outset. But you can always deactivate the Pay Over Time feature if you’d prefer to retain a charge-only model and avoid using this Card to carry a balance with interest. Of course, it can be reactivated if and when you choose to take advantage of Pay Over Time’s additional payment flexibility in the future – perhaps you’re planning a luxurious honeymoon and want to pay it off at your own pace.

Pay Over Time does not impact your overall spending capacity. So even if you choose to pay some of your balance over time, you’ll still be able to enjoy no preset spending limit.² However, there is a limit to the total amount that you can carry as a balance, called your Pay Over Time Limit. In other words, you may be able to spend beyond your Pay Over Time Limit while still earning rewards – you’ll just need to pay for any new purchases in full when your bill is due. Your Pay Over Time Limit is the limit on how much of a balance you can carry with interest, or how much you can put in a plan with Plan It^®.