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What should you know about Chase's new Policy on "Cash-Like Transactions."
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What to Know About Chase's new Policy on "Cash-Like Transactions."
These transactions could result in fees and block the purchase from earning rewards.
The article was written by Gregory Karp Senior Writer | Credit cards, personal finance, credit scores Gregory Karp is a former NerdWallet writer , and an expert on personal finance and credit cards. Journalist for more than 30 years, he's been a newspaper reporter and editor. He has written two personal finance books and developed"Spending Smart," a "Spending Smart" syndicated newspaper column. His honors include national recognition many times from the Society for Advancing Business Editing and Writing.
Updated April 15, 2022 10:17AM PDT
Editor: Kenley Young, Assigning Editor Credit cards, credit scores Kenley Young is the director of daily credit cards coverage for NerdWallet. Before that, he was a homepage editor and digital content producer for Fox Sports, and before that a front page editor at Yahoo. He has a wealth of experience in both digital and print media, with periods as a copy desk chief, a wire editor and metro editor at McClatchy. McClatchy newspaper chain.
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Chase is now using a revised and expanded description of "cash-like transactions," which for Chase credit card holders refers to transactions that result in the penalty of taking the risk of taking . Cash advance rules may differ depending on the card, but they often include expensive fees and interest as well as excluding purchases from earning reward points such as cash back, mileage or points.
A common example of cash-like transactions, often called "cash equivalents," would be using credit cards to cash out cash at an ATM.
In a way, Chase is just making the current definition of Chase clear. The changes take effect at various dates, mostly between April 1 and April 2 of 2021.
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What's changing
Chase in recent years has rejected some types of transactions, including funding an account for and through an exchange. This was the case even after Chase implemented its new definition of transactions that resemble cash.
If Chase eventually allowed these transactions, they're now clearly identified as cash-like transactions and would be considered cash advances.
In its notice of cardholders Chase stated that cash transactions are comprised of, but not restricted to four categories:
Exchange of currency and other types payments: travelers checks, foreign currency, money orders, wire transfers, cryptocurrency, and other similar digital or virtual currency and similar transactions.
Gambling: Lottery tickets, casino gambling chips, racetrack bets and similar gambling transactions.
P2P payments: Money-transfers between people transfer and account-funding transactions that transfer money.
Third-party bill-pay services: Includes bill-payment transactions not made directly with the merchant or their service provider.
Certain items like lottery tickets, were already considered cash-like transactions in the previous agreements with cardholders from Chase. The new definition is more expansive to clarify what Chase is referring to by cash-like transactions, it said.
Not included in the list is explicit mention of certain well-known payment methods, such as , Google Pay, Venmo, PayPal Key and . A Chase spokeswoman said all of those "could" be classified as cash-like transactions. However the purchase of goods and services by a company using a third-party payment service are not cash-like transactions , and would not have the associated fees, she said.
So, for example the use of a Chase card to fund the purchase in person through Apple Pay or an online purchase made through PayPal at the point of purchase would not be considered a cash-like transaction.
Transactions made using a Chase transactions made with a credit card will be regarded as purchases and would not be cash-like transactions, she explained.
And Plastiq states that it will automatically reject transactions if the issuer treats them as a cash advance.
The definition of the word is important.
Generallyspeaking, a transaction that is based on cash could have these downsides:
The fee for cash advances . This is a once-off fee charged when you take the advance, which is usually between 3% and five percent of the amount.
A higher interest rates. A lot of cards have an annual percentage rate that is higher on cash advances than regular purchases.
No grace period. If you settle your balance in full monthly, you'll usually have a of at least two weeks to settle for purchases before you're charged for interest. Cash advances, though, start to accrue interest from Day One.
Credit limit lower. Certain credit cards offer an additional cash advance credit limit that is lower than the overall credit limit.
There are no rewards on credit cards. The cash equivalent may not qualify for rewards, such as cash back and travel points or miles. Also, it will not count toward your required spending to receive a sign-up reward.
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What should you do if worried
If you're concerned about being hit with cash advance charges or other charges, call the number located on the bottom of the credit card and request that Chase . This way, if a purchase is found to be a cash-like purchase, it will be rejected if it's over that limit instead of being assessed fees.
If you don't like Chase's new concept of transactions that are similar to cash, you may reject them until the day they go into effect. Then, Chase will cancel your account.
What Chase provides as an alternative
Cash advances are an expensive option to earn cash. However, Chase provides another method to get access to the credit card's line credit besides making purchases, should you want to do so.
My Chase Loan
It is similar to it's like a is similar to a loan. Once approved, you receive an immediate deposit into the account of your bank account. You have a set amount of time to pay back the loan and are being charged a variable rate of interest that is based on the Chase card you're using to pay for the loan.
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About the author: Greg Karp is a former NerdWallet writer and an expert on personal finance and credit cards. He previously worked at Chicago Tribune. Chicago Tribune and wrote two money books.
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