Ah car insurance. Seemingly expensive when you don’t need it, but instantly worth it when you do. Typically car insurance can be purchased in six month increments, and usually you are presented with the option of paying all at once, or monthly.
I have my insurance through Progressive, and recently received my renewal offer. As expected, the monthly payments were significantly more expensive over the course of a six month period than just paying all at once ($858.50 vs. $654.50). But the downside of course was cash flow. Having to remove $654.50 of my hard earned cash from my bank account meant I couldn’t earn interest on it or keep it saved. But what if there was another way?
If you have an American Express personal credit card, you may have noticed a button like this when looking at your statements:
Plan It is Amex’s payment plan feature which lets you split large charges (more than $100) into multiple installments with a fixed fee and no interest. Allow me to get on my soap box for a moment…typically I would advise against using installment plans for large purchases, especially non-essentials like computers, vacations, etc. While everyone’s personal financial situation is different, my advice is to spend within your means where possible.
That being said, car insurance to me is an exception. It is a prepaid bill, but typically requires an up-front payment for the whole period, or an inflated monthly payment. So I began looking at Plan It as a way to maintain cash flow while avoiding Progressive’s high monthly installment fees. Making this even easier was the following offer currently showing on my account:
Essentially, Amex is letting me pay a large charge over six months with zero interest and zero fees. Sweet! The website has a handy calculator showing what payments will equal:
I chose the 6 payment option and locked it in. Amex give you the ability to pay it offer early if desired, which is nice. In the end, my monthly payment dropped from $143.53 which is what I would have paid Progressive directly to $109.09 by paying through Amex.
The eagle eyed among you may have noticed that Progressive don’t accept American Express directly, so how did I pay for this using my Amex card? Simple – I used Paypal. I have my Amex cards connected to my Paypal account, and Paypal is an option for paying Progressive!
What do you think about Plan It? Have you used it before? Let me know in the comments!