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Cash Advances Still Sting But a Card Loan with a Credit Card Loan? Maybe Less So

 

 

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Cash Advances Still Sting However, what about a Credit Card Loan? Maybe Not So

 

Options to borrowing to your credit limit -- - if your card has such features -- can cost less than using your credit card in an ATM to withdraw fast cash.

 

Written by Sara Rathner Senior Writer/Spokesperson | Travel rewards, credit cards credit cards, debt repayment Sara Rathner is a NerdWallet expert in credit and travel. She has appeared as a guest on "Today" show and the CNBC's "Nightly Business Report," and has been quoted by The New York Times, The Washington Post, The Wall Street Journal, Yahoo Finance, Time, Reuters, NBC News, Business Insider and MarketWatch. Prior to making the move to NerdWallet, Sara worked at The Motley Fool for nearly 10 years. She also worked as a personal finance writer freelance and paraplanner and has an associate's degree in journalism from Northwestern University.

 

 

 

 

 

 

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

 

 

 

Editor: Kenley Young, Assigning Editor Credit score, credit cards Kenley Young is the director of daily credit cards coverage for NerdWallet. Previously, he was an editor of the homepage and digital content producer for Fox Sports, and before that a front page editor for Yahoo. He has decades of experience in digital and print media, with periods as an editor at the copy desk as well as a wire editor, and metro editor for McClatchy. McClatchy Newspaper chain.

 

 

 

 

 

 

 

 

 

 

 

The majority or all of the items featured on this page are provided by our partners, who pay us. This impacts the types of products we write about as well as the place and way the product is displayed on the page. But this doesn't influence our opinions. Our opinions are entirely our own. Here is a list of and .

 

 

 

 

A LOT LIKE THIS

 

 

 

If you're not able to access the funds within your bank account to deal with an unexpected expense it is a way to quickly access the funds you require, but there are some major downsides. You'll be responsible on cash-advance and ATM fees, along with interest that begins to accrue when you receive the money.

 

In regards to that interest: According to the data of the Federal Reserve of St. Louis The average APRs for cards that charge interest were 20.4 In November 2022, the rate was 20.4 percent. This is already quite high and, in many instances the interest rates for cash advances are even more than that.

 

Also, this cash advance is going to cost you.

 

However, you may have other, less expensive options, thanks to credit card loan programs that allow you to take advantage of your existing credit limit -- which is what you're doing when you make a request for a conventional cash advance. However, unlike cash advances, these newer loan programs offer a number of advantages:

 

A fixed interest rate for the life of the loan.

 

No separate loan application or credit check is required.

 

No fees in many cases that go beyond interest payments (or any late payment that you might make).

 

An open process that lets you know what options you'd be eligible for , as well as what the monthly cost of each option would be.

 

 

New ways to use credit to repay your loan

 

In the world of major lenders among the major lenders, both Chase and Citi offer these types of loans to those who are cardholders with qualifying. You can find out what you could potentially have the ability to get by signing in to 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 choice of various payment plans with varying terms -- for example, you might have the option of choosing an option like a six-month plan or a 12-month plan, potentially at a much lower APR (think single digits) than your card's ongoing variable rate for purchases. (Your rate and terms depend the creditworthiness of your.) You'll also find out what the monthly payment would be with every loan option. Your loan installment will become part of your credit card's minimum monthly payment until you pay it off. There's no penalty for if you choose to pay the loan early. Conditions apply.

 

Citi Flex Loan

 

A is similar to borrowing the minimum amount of $500 with a fixed rate for a predetermined period of time. You'll have the option of choosing between loans with different amounts and lengths, and you'll know what your monthly payments will be based on the terms you select. Your payment will be included with your minimum credit card bill every month. The terms and conditions apply.

 

Beyond the scope of these loan programs offered by major players, you may have other options. For example, hybrid offerings offered by a start-up known as Upgrade can be used to make purchases, as you would normally with a conventional credit card. However, you pay for your purchase in fixed installments with the same rate like the personal loan. You may also be able to take out a loan against your credit limit by asking for cash to be deposited into your account. The terms and APRs vary but it can be less costly than cash advances.

 

Potential disadvantages

 

Both loan programs provide access to money relatively quickly for a lower cost than cash advances however, there are downsides:

 

You don't get cash in hand immediately. If you have a Chase Loan the borrowed money may require between one and two business days before it is directly transferred in your checking account. Citi Flex Loans can also come in the form of direct deposits which can be as quick as a business day or a mail-in check that takes however long the mail is delayed by the mail.

 

Interest rates may not be as competitive as personal loans. Depending on what you qualify for, you may be eligible for lower interest rates on other types of loans (though for a personal loan it is necessary to apply and go through a credit check). If you've got a bit more time to look around and compare rates, it's worth looking into other options to ensure you can secure the cash you need.

 

However, you'll still have to pay interest. If you require cash to make a purchase in the near future, there are other possible payment options that do not charge interest, though you may be charged charges.

 

 

Alternatives to consider

 

If you've got expensive future purchases There are options you can use credit cards to hold off interest payments or split up installments:

 

A similar plan that you can get through an account on your credit card such as My Chase Plan or Citi Flex Pay lets you to divide a bigger cost into monthly installments which are added to the bill for your credit card. With Chase plans, you'll be charged a monthly fixed fee and with Citi's plan you'll be charged interest. Other major issuers also offer various versions or other of the plans. But whether you opt into an installment plan through your credit card, or an unaffiliated buy now, pay later option, be sure to exercise caution. A report released in September 2022 by the Consumer Financial Protection Bureau identifies costly risks associated with these plans, such as the possibility of spending more, as well as the chance of being unable to afford payments if you stack multiple loans at once.

 

A credit card with an interest-free promotion of 0% for new purchases could give you a year or more according to the card, to settle the balance on a debt-free basis. But be aware that if are still in debt when the promotion ends and you're assessed the normal interest rate.

 

 

 

 

The author's bio: Sara Rathner is a NerdWallet credit and travel expert. She has appeared as a guest on "Today" show, Nasdaq as well as CNBC's "Nightly Business Report."

 

 

 

 

 

 

 

 

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