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What you need to know about Chase's New Policy on "Cash-Like Transactions."
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What you need to know about Chase's new Policy on "Cash-Like Transactions"
The transactions may result in charges and prevent the purchase from earning rewards.
By Gregory Karp Senior Writer | Personal finance, credit cards and credit scores Gregory Karp is a former NerdWallet writer and an expert on credit and personal finance. Journalist for more than 30 years, he's been a newspaper reporter and editor, authored two personal finance books and developed his own "Spending Smart" syndicated newspaper column. His distinctions include national recognition numerous times by the Society for Advancing Business Editing and Writing.
Updated April 15, 2022 10:17AM PDT
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Chase has adopted a new and expanded definition of "cash-like transaction," which for Chase credit card holders refers to transactions that result in the penalty of using a . Cash advance regulations can differ according to the card you use, but they often contain high-cost fees and higher interest while also disqualifying any purchase that is not eligible for rewards, for example, cash back points or miles.
A common example of transactions that are similar to cash, also called "cash equivalents" would be using credit cards to cash out cash from an ATM.
To some extent, Chase is just making the current definition of Chase clear. The changes will be effective at various dates, mostly from mid-April to early April 2021.
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What's happening?
Chase in recent years has rejected some types of transactions, including the funding of an account to and through an exchange. The same was true when Chase introduced its new definition of cash-like transactions.
But if Chase eventually allowed these transactions, they are clear as cash-like transaction and would be considered cash advances.
In its notice to cardholders, Chase declared that transactions like cash include, but are not limited to, four categories:
Other forms of payment: Travelers' cheques foreign currency, money orders digital currency, transfers to wires, or any other like virtual or digital currencies and similar transactions.
Gaming: Lottery tickets, casino gaming chips, bets on racetracks and similar online and offline gambling transactions.
P2P payments: Person-to-person money transfers and account-funding transactions which move money.
Third-party bill-pay service: It includes bill-payment transactions not made by the vendor directly or through their provider.
Some of those things, such as lotto tickets were already classified as cash-like transactions under Chase's prior agreements with cardholders. The new definition expands to clarify what Chase refers to as cash-like transactions.
Not included in the list is the explicit mention of some prominent payment platforms, such as , Google Pay, Venmo, PayPal Key and . A Chase spokeswoman said each of them "could" be considered an equivalent transaction to cash. However, purchases of goods and services by a company using a third-party payment service are not cash-like transactions , and do not incur the charges, she explained.
For instance, using a Chase card to pay for 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 transactions made with a Chase transactions made with a credit card will be treated as purchases , and therefore would not be cash-like transactions, she stated.
And Plastiq states that it will automatically reject transactions when the issuer views the transaction as a cash advance.
Why the definition matters
Generallyspeaking, a transaction that is based on cash may have disadvantages like:
Cash advance fees . This is a one-time fee charged when you take your advance, typically 3 to 5% of the amount.
A higher interest rate. Many credit cards offer a higher annual percentage rate for cash advances than for regular purchases.
No grace period. If you pay your amount in full each month, you'll usually have a minimum of 21 days to pay off purchases before you're charged for interest. Cash advances, however begin to earn interest from Day One.
Credit limit lower. Certain credit cards come with an additional cash advance credit limit that is lower than the overall credit limit.
There are no rewards on credit cards. Your spending on a cash equivalent is probably not eligible for rewards, such as cash back and travel points or miles. In the same way, it doesn't contribute to your spending requirement to receive a sign-up reward.
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What can you do if you're worried
If you're concerned about getting in the middle of cash advance fees, you can call the number located on the bottom of the credit card and request that Chase . That way, if a purchase is found to be a cash-like transaction and is rejected in the event that it's exceeded instead of being charged fees.
If you aren't happy with Chase's recent changes to the definition of cash-like transactions, you are able to reject them until the day before they become effective. Then, Chase will cancel your account.
What Chase provides as alternatives
Cash advances can be a costly option to earn cash. But Chase provides another method to get access to the credit card's line credit, besides purchasing, if that's your goal.
My Chase Loan
is like is similar to a like a bank loan. Once approved, you receive an immediate deposit into your bank account. There is a predetermined period of time to pay the loan, and you're paying a variable interest rate dependent on the Chase card you are using for the loan.
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Author bio Greg Karp is a former NerdWallet writer, and an expert on personal finance and credit cards. He previously worked at the Chicago Tribune and wrote two money books.
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