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Cash Advances Are Still a Pain However, what about the Credit Card Loan? Maybe Less So

 

 

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Cash Advances Still Sting, but the Card Loan with a Credit Card Loan? Maybe Less So

 

Alternatives to borrowing to your credit limitdepending on whether your card provides these features, they can be less expensive than using your card at an ATM to withdraw fast cash.

 

By Sara Rathner Senior Writer/Spokesperson | Travel rewards, credit cards credit cards, debt repayment Sara Rathner is a NerdWallet expert on credit and travel cards. She has been featured on the "Today" show, as well as CNBC's "Nightly Business Report" and has been featured on The New York Times, The Washington Post, The Wall Street Journal, Yahoo Finance, Time, Reuters, NBC News, Business Insider and MarketWatch. Before becoming a part of NerdWallet, Sara worked at The Motley Fool for nearly 10 years. She also worked as a personal finance writer freelance and paraplanner , and holds a bachelor's education in Journalism from Northwestern University.

 

 

 

 

 

 

Updated Feb 7, 2023 at 6:43 AM PST.

 

 

 

Written by Kenley Young, Assigning Editor Credit cards, credit scores Kenley Young oversees the daily coverage of credit cards for NerdWallet. Previously, he was an editor of the homepage and digital content producer for Fox Sports, and before that , a front page editor at Yahoo. He has years of experience in digital and print media, with stints as a copy desk chief as well as a wire editor, and metro editor for the McClatchy newspapers chain.

 

 

 

 

 

 

 

 

 

 

 

The majority or all of the products featured here are from our partners who pay us. This influences which products we review and where and how the product is displayed on a page. However, this does not influence our opinions. Our views are entirely ours. Here's a list of and .

 

 

 

 

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When you lack the money in the bank account to deal with an unexpected expense A cash advance is one option to quickly access required funds, however there are some serious drawbacks. You'll be responsible to pay cash advances and ATM fees, along with interest that will begin accruing the moment you get the money.

 

In regards to that interest: According to data from the Federal Reserve of St. Louis, average APRs among cards that charged interest exceeded 20.4% in November 2022. That's pretty high already and, in many cases, interest rates specifically for cash advances are higher than this.

 

Also, this cash advance will cost you.

 

However, you might have other, less expensive optionswith credit card loan programs that allow you to take advantage of your existing credit limit -- which is what you're doing when you apply for a traditional cash advance. But unlike a cash advance the newer loan programs offer a number of advantages:

 

Fixed interest rates for the duration of the loan.

 

There is no separate loan application or credit check is required.

 

In many cases, there are no charges, beyond your interest payments (or any possible late payments).

 

An open procedure that allows you to see what options you'd be qualified for and what the monthly cost of each one would be.

 

 

New ways to take advantage of your credit limit to borrow

 

Of the major lenders among major lenders, each of Chase and Citi offer these types of loans to cardholders who meet the criteria. You can determine if you'd likely have the ability to get by signing into your account online or through the Chase or Citi applications.

 

My Chase Loan

 

The card allows you to take out up to 500 dollars. You'll have the option of several payment plans of different terms. For example, you might be able to choose one of the six-month or 12-month plan, potentially at a much lower APR (think single digits) than the card's regular variable rate for purchases. (Your rate and conditions will vary based upon your creditworthiness.) Also, you'll be able to see what the monthly payment would be with every loan option. Your loan installment will become part of your credit card minimum payment each month until you've paid it off. There's no penalty if decide to pay off your loan early. Terms apply.

 

Citi Flex Loan

 

A is similar to borrowing at least $500 with a fixed APR for a specified period of time. You'll be able to choose from loans that vary in amount and lengths. You'll also be able to see how much your monthly payment will be in accordance with the terms you choose. Your payment will be included with your minimum credit card installment each month. Conditions apply.

 

Beyond these loan programs from big companies, you might have other options. For instance, hybrid products offered by a start-up known as Upgrade can be used to purchase items, just as you would do with a traditional credit card. However, you pay off your bill in installments fixed at an APR that is fixed, just as you would with the personal loan. You may also be able to take out a loan against your credit limit by asking for cash to be deposited in your account. APRs and terms vary however it could be cheaper than a cash advance.

 

Potential disadvantages

 

Both loan programs allow access to money relatively quickly for a lower cost than a cash advance However, there are disadvantages to both:

 

You don't get cash in hand immediately. If you have a Chase Loan the loaned money could require between one and two business days before it is directly transferred in your checking account. Citi Flex Loans can also be accessed via direct deposit which can be as quick as a working day or a mail-in check that takes however long the mail takes.

 

Rates of interest may not be as competitive as personal loans. Depending on what you qualify for, you may be able to get lower interest rates on other types of loans (though for personal loan you will need to make an application and pass a credit check). If you have a little more time to research and compare rates, it's worthwhile to consider other ways you can access the funds you require.

 

You'll still pay interest. If you require cash for upcoming purchases, there are other possible ways to pay with no fees, although you might be charged a fee.

 

 

Options to think about

 

If you've got expensive purchase coming up, there are ways to use credit cards to hold off interest payments or divide payments:

 

A -like plan through the credit card you use -- like My Chase Plan or Citi Flex Pay -- allows you to divide a bigger amount into monthly installments that are added to the bill for your credit card. With Chase, you'll pay a monthly fixed fee for the plan, while with Citi's, you'll be charged interest. Numerous other major issuers provide various versions that includes these types of plans. If you decide to join an installment plan with your credit card, or an unaffiliated buy now, pay later service, take care. A September 2022 report from the Consumer Financial Protection Bureau identifies risky and costly plans, including the likelihood of spending more, as well as the risk of being unable to afford the payments if you pile on several loans at once.

 

A credit card that has the 0% interest rate on new purchases can give you up to a year, according to the card, to settle any balances interest-free. Just know that if you have any remaining debt when the promotion is over, you'll begin to be subject to the usual interest rate.

 

 

 

 

Author bios: Sara Rathner is a NerdWallet credit and travel expert. She has appeared on the "Today" program, Nasdaq along with CNBC's "Nightly Business Report."

 

 

 

 

 

 

 

 

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