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Credit Card Issuers Are Offering Lower Ways to Access Your Credit Line
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Card Issuers Are Offering Cheaper ways to access your Credit Line
Cash advances that cost a lot of money are no longer the only way to tap into credit. But there are disadvantages to consider.
Written by Melissa Lambarena Lead Writer | Credit cards and credit cards, Melissa Lambarena is a lead writer for the credit card group at NerdWallet. She has been a passionate writer covering credit card-related topics for over six years. Her previous experience includes nine years of experience as an author for various websites and publications. In her writing, she aims to help readers extract value from credit cards to meet financial goals like expanding their budgets, building credit, traveling to places of their dreams and paying off debt. She explores these topics and others in and The Millennial Money column featured in The Associated Press. Her writing has also been featured within The New York Times, Chicago Tribune, The Washington Post, USA Today and Yahoo Finance, among others. Melissa holds a bachelor's degree of sociology, earned from the University of California, Los Angeles.
Updated Feb 9, 2023, 4:54PM PST
Written by Kenley Young, the Assigning Editor Credit score, credit cards Kenley Young directs daily coverage of credit cards for NerdWallet. Previously, he was a homepage editor and digital content producer for Fox Sports, and before being a front-page editor at Yahoo. He has decades of experience in digital and print media. This includes stints as chief of the copy desk as well as a wire editor, and an editor of the metro at The McClatchy newspapers chain.
A majority of the products featured here come from our partners, who pay us. This influences which products we write about and where and how the product is displayed on a page. But, it doesn't influence our evaluations. Our views are our own. Here is a list of and .
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Credit cards are a convenient way to pay for something however, historically they've been unable to provide affordable or flexible methods to access your credit line beyond making purchases.
In the past, the only other ways to use your credit card to get money was an, which is usually with a sky-high rates of interest and costly fees. If your finances are already in a bad state, this kind of costly short-term loan can only make things worse.
In recent times, more efficient and economical options are appearing. In recent years, each of the major credit card companies as well as startups have launched products as well as features to make it more convenient -- and cheaper -to use your credit line to pay friends, make large purchases at lower rates, cover the cost of a purchase you're not able to pay by credit card or get cash to be deposited into the account of your bank account.
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Easier peer-to-peer payments
Never carry cash these days? Perhaps you're only a couple of dollars short of your portion of the check at dinner? It's possible to consider an American Express feature , launched in November of 2020 and is available on qualifying cards through AmEx's mobile app.
The "Send" part of this function lets you use your eligible AmEx card to pay other people through or but without the transaction costs that normally be charged to credit cards such as this on these platforms -- typically approximately 3percent.
The terms apply, with limitations on the amount you are able to transfer, and these transactions aren't eligible to earn rewards. However, they can be a great option to split the costs of gifts, food or even more.
"We've definitely seen some sustained customer involvement," said Stephanie Schultz, vice President and director of new strategic partnerships of American Express. "One of the most popular areas we've observed has been gifting, especially during the Christmas season."
Things to remember: As with any charge to your credit card, you'll need to pay for the "Send" transaction in full before the due date in order to avoid paying charges for interest. The terms and conditions apply.
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Flexible financing and installment-loan options
What happens if you want to finance a bigger expenditure? A few card issuers as well as startups can turn your credit line to the form of an installment loan.
Chase and Citi, for example offer, and, in turn offer and, respectively, to cardholders with a certain. These options function much like the personal loan from a bank, and the money is deposited directly in the bank account.
You'll be given a specific amount of time to repay the loan by a monthly fixed payment. The loan will be charged with interest, but potentially at a rate that's lower than your credit card's ongoing APR. This makes it possible to apply for a loan without an application, which means no new credit score.
"With My Chase Loan, our customers have informed us that the option to take the loan without a credit check, no credit check and no new account to manage, at an APR that is less than their card's typical APR, is attractive," said a Chase spokesperson in an email. "They appreciate the convenience that comes with knowing the monthly repayment amount and loan duration upfront, and the assurance that there's no early or origination fee."
If you need time to make a payment on a huge purchase, this solution could be better than simply charging the purchase directly to your credit cardand it's cheaper than a cash advance.
Keep in mind This is because these programs are targeted, which means they might not be accessible to every person at all times. Include the possibility of impact on the utilization of your credit (and your credit scores) as well as the overall price of the loan even at an APR lower. This loan amount you can request will depend on your credit limit and creditworthiness. Hence, it may still be worth looking into personal loan rates offered by other institutions.
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Nerdy Tip
If you're looking to split a single credit card transaction into more manageable chunks, you could consider using the Chase My Chase Plan option or Citi's Flex Pay feature. Similar to that as the Mastercard payment network is in the process of launching a service called . Terms and charges may apply, but such choices can make monthly installments more reliable. AmEx also offers a feature, for which there is a fixed monthly cost and you'll be aware of what you'll have to pay each month. Terms apply.
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Startups have options, too.
The startup company Upgrade provides an innovative and flexible hybrid product -- the -- that blends elements of credit cards and personal loans.
When you use it for credit card, any remaining balances are converted into installment loans.
If you take it as an individual loan it is possible to get funds deposited into the account of your bank account.
In either case, you can pay back the amount by equal installments over a period of time, at the same rate of interest within a specific timeframe. (Note that with personal loans you'll also have to pay an additional 5% cash advance fee.)
What to keep in mind: The APR you qualify for will vary like other installment loan options, it's important to check rates from other lendersas well.
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Third-party choices
If your credit card provider isn't as flexible with access to your credit line, third-party services might be an alternative option.
For instance, for a fee, lets you use eligible credit cards to pay bills you can't usually pay through credit cards, such as mortgage, rent, day care, utilities and more. You charge your credit card through Plastiq for the amount of the bill (plus the 2.9% processing fee), then Plastiq pays you on behalf of the person who received it.
It can be a valuable service if, say, a bill is due immediately but you require some time to relax while waiting for a paycheck to be received. In contrast to alternatives, you can earn credit card rewards, which can help to pay for some of the processing cost.
The past was when Berna Anat, a San Francisco resident and content creator, made use of this service to pay bills and earn points that allowed her to take an excursion to New Zealand and other destinations.
"I only ever charge as much as the cash I had already saved for the month" she said.
Keep in mind When you think about it: Although a 2.9% processing fee can be less costly than cash advances however, it still packs a big bite, especially when it comes to large transactions. And if you can't afford to pay for the charge in full by your credit payment due date, you'll be charged interest at your card's ongoing APR, which could be very costly. In addition, some credit cards might not be compatible with third-party bill payment services. Before using one, check with the issuer about how (or what) the payment will be processed. It could be regarded as an advance in cash or a cash advance, for instance, rather than a purchase.
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The author's bio: Melissa Lambarena is a credit card writer at NerdWallet. Her work has been highlighted by The Associated Press, New York Times, Washington Post and USA Today.
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