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Cash Advances Are Still a Pain, but a Card Loan with a Credit Card Loan? Perhaps Less So

 

 

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Cash Advances Still Sting However, what about A Card Loan with a Credit Card Loan? Maybe Less So

 

Alternatives to borrowing from your limitdepending on whether your card provides the option to do so -- could be less expensive than using your card at an ATM to get quick cash.

 

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

 

 

 

 

 

 

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

 

 

 

Written by Kenley Young, Assigning Editor Credit scores, credit cards Kenley Young directs daily credit cards coverage for NerdWallet. Prior to that, he worked as a homepage editor and digital content producer for Fox Sports, and before that , a front page editor for Yahoo. He has decades of experience in both digital and print media. This includes periods as the chief of the copy desk, a wire editor and an editor of the metro at the McClatchy Newspaper chain.

 

 

 

 

 

 

 

 

 

 

 

The majority or all of the products we feature come from our partners who compensate us. This impacts the types of products we feature and where and how the product is displayed on the page. But, it doesn't influence our opinions. Our opinions are our own. Here is a list of and .

 

 

 

 

A LOT LIKE THIS

 

 

 

When you lack the money on your bank account to deal with an unexpected expense, a is one way to quickly access needed funds -- but there are a few major disadvantages. You'll be responsible on cash-advance and ATM charges, as well as interest that will begin accruing as soon as you receive the cash.

 

Then there's the interest. According to the data of the Federal Reserve of St. Louis, average APRs among credit cards with interest rates reached 20.4% in November 2022. This is already quite high, and in many cases the interest rates for cash advances are even higher than that.

 

That is to say, that cash advance is going to cost you.

 

But, you could have cheaper optionswith credit card loan programs that let you take advantage of your existing credit limit. This is basically what you get when you make a request for a conventional cash advance. But unlike a cash advance, these newer loan programs offer a number of advantages:

 

A fixed interest rate for the duration of the loan.

 

There is no separate loan application or credit checks are required.

 

In many cases, there are no charges, beyond your interest payments (or any late payment that you might make).

 

A transparent process that lets you know the choices you're eligible for , as well as what the monthly price of each one would be.

 

 

New ways to use credit to repay your loan

 

In the world of major lenders, they both Chase and Citi offer these types of loans to qualifying cardholders. You can find out what you could possibly qualify for through logging in to your account online, or using the Chase or Citi apps.

 

My Chase Loan

 

allows you to borrow at least 500 dollars. You'll have the choice of a variety of payment plans with different terms. For instance, you may be able to choose something like a six-month or 12-month plan, which could be with a lower APR (think single digits) than your card's ongoing variable rate for purchases. (Your rate and conditions will vary based the creditworthiness of your.) Also, you'll be able to see the amount of your monthly payments will be for every loan option. Your loan amount will add to the credit card minimum monthly payment until you've paid it off. There's no penalty for if you opt to pay off your loan in advance. Conditions apply.

 

Citi Flex Loan

 

A is similar to borrowing a minimum of $500 with a fixed rate for a predetermined period of time. You'll be able choose from loans with different amounts and lengths. You'll also see what your monthly payment will be in accordance with the terms you choose. The payment will be made with your minimum monthly credit card payment every month. Terms apply.

 

Beyond the scope of these loan programs offered by major companies, you might have alternative options. For example, hybrid offerings from a startup called Upgrade can be used to purchase items, just as you would do with a traditional credit card, however the bill is paid in fixed installments at the same rate similar to the personal loan. You can also borrow against your credit limit by asking for cash to be deposited in your account. APRs and terms vary, but it may still be less costly than a cash advance.

 

Possible drawbacks

 

Both loan programs allow quick access to cash with a lesser cost than cash advances, but there can be negatives

 

You don't get cash in hand immediately. If you have a Chase Loan the loaned money could take one to two business days to be directly transferred into your account. Citi Flex Loans can also be accessed via direct deposits which can be as quick as a working day or a check that is mailed that takes however long the mailer takes.

 

Interest rates may not be as competitive as personal loans. Based on the type of loan you are eligible for, you might be eligible for lower rates on other types of loans (though for personal loan it is necessary to make an application and pass the credit screening). If you've got a bit more time to look around 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 to make a purchase in the near future you can choose other payment options that do not charge fees, although you might be subject to charges.

 

 

Other options to be considered

 

If you've got expensive purchase coming up There are ways you can use credit cards to hold off interest payments or split up payments:

 

A similar plan with an account on your credit card like My Chase Plan or Citi Flex Pay -- allows you to divide a bigger cost into monthly installments which are added onto the credit card bill. With Chase, you'll pay an annual fee that is fixed for the plan, while with Citi's you'll pay interest. Many other major issuers offer various versions that includes these types of plans. But whether you opt into an installment plan through your credit card or through a third-party buy now, pay later, you must exercise caution. A report issued in September 2022 from the Consumer Financial Protection Bureau identifies costly risks associated with these plans, which include the risk of spending more and the chance of being unable to make payments if you stack multiple loans simultaneously.

 

A credit card that offers a 0% interest promotion for new purchases could give you a full year according to the card, to pay down the balance on a debt-free basis. But be aware that if have any remaining debt when the promotion expires and you're charged the card's usual interest rate.

 

 

 

 

About the author: Sara Rathner is a NerdWallet travel and credit cards expert. She has appeared as a guest on "Today" program, Nasdaq and CNBC's "Nightly Business Report."

 

 

 

 

 

 

 

 

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